FHA Loan in California: How To Qualify?
JW
Last updated 04/08/2024 by
Jessica WalrackThe Federal Housing Administration (FHA), part of the Department of Housing and Urban Development’s (HUD) Office of Housing, provides guarantees on home loans to help more Americans afford homeownership. These loans offer three key benefits, low down payments, low closing costs, and flexible eligibility requirements. But, how can you qualify for an FHA loan in California?
If you’re looking to buy a home in California with an FHA loan, here’s what you need to know.
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What do you need to qualify for an FHA loan in California?
To qualify for an FHA loan as an individual borrower in California, you’ll need to (at least) meet the following general borrower eligibility requirements:
- Have a Social Security Number (SSN).
- Be of legal age in your state to enter into a mortgage Note (18 in California).
- Have a Minimum Decision Credit Score (MDCS) of 500.
- Purchase the home as your principal residence (some exceptions apply).
- Hold qualifying residency status.
- No delinquent federal non-tax debt.
- No current delinquent FHA-insured mortgages.
- Property is free and clear of liens.
- The property must be an existing one-to-four-unit residence (Note, you can also construct a one-to-four-unit residence with an FHA Construction-to-Permanent Mortgage).
These are the eligibility basics you need to know, which apply to all FHA-insured financing nationwide. The FHA program is outlined in detail in the 1000+-page FHA Single Family Housing Policy Handbook.
Keep in mind that FHA loans are not provided directly by the FHA. Third-party lenders offer the loans, and the FHA just guarantees them. So, lenders may set stricter eligibility requirements if they choose. It’s a good idea to shop around with a few lenders before deciding on one.
FHA loan California: credit score requirements
The standard credit score requirements for an FHA loan are as follows:
- A Minimum Decision Credit Score (MDCS) of 500 to 579 is required for approval with a required down payment of 10%.
- A Minimum Decision Credit Score (MDCS) of 580 is required for the 3.5% down payment.
Your Minimum Decision Credit Score (MDCS) is determined by pulling your credit score from the three credit bureaus. If two credit scores are available, the MDCS is the lowest one. When all three scores are available, the one in the middle will be the MDCS.
Again, while the FHA requires a credit score of 580 or higher, lenders can require a higher score at their discretion.
Other FHA loan California requirements
The FHA has a variety of requirements beyond an applicant’s credit scores, which include:
- Age (18 in California)
- Social security number
- Factors about co-borrowers or co-signers
- Residency
- Citizenship and immigration status
- Principal residence location
- Debt
- Liens on the property
The qualification process is complex and will take time. However, these loans are designed to help people with low-to-moderate income and credit purchase homes. If you fall into that category, it’s definitely a program to investigate.
Can you get FHA loans in California with bad credit?
It is possible to get an FHA loan in California with bad credit. A credit score under 579 is considered poor according to both the FICO and VantageScore scoring models. The FHA permits borrowers with scores as low as 500, so if you can find a lender that will approve you, you technically could qualify as far as the FHA is concerned. However, you won’t be eligible for the low 3.5% down payment. If your credit score is under 580, but at or above 500, you’ll need to put down 10% of the home’s purchase price.
If you don’t have funds for a down payment, there are down payment programs that may be able to help. Further, CalHFA FHA loans are worth investigating.
What are CalHFA FHA loans?
The California Housing Finance Agency (CalHFA) is a self-supporting state agency that helps Californians with low-to-moderate incomes to find homes. It offers two FHA programs; the CalHFA FHA Loan Program and CalPLUS FHA Loan Program.
The CalHFA FHA Loan program offers a 30-year fully amortized FHA-insured first mortgage with a fixed interest rate.
The CalPLUS FHA Loan Program also offers a 30-year fully amortized first mortgage insured by the FHA, but it comes with a higher fixed interest rate. The reason for the higher interest rate is because the CalPLUS FHA loan can be used in collaboration with the CalHFA Zero Interest Program (ZIP). ZIP offers a 30-year, no-interest, deferred-payment second mortgage equal to 3% to 4% of the first mortgage amount designed to cover the closing costs.
These programs have stricter eligibility requirements than national FHA loans, requiring a 660 credit score, amongst other things, but also offer assistance with down payments and closing costs. It’s worth reviewing the terms and requirements when considering your FHA loan options. Click here to learn the difference between an FHA loan and a conventional loan.
California FHA loan limits
What is the maximum FHA loan amount in California? FHA loan limits vary by county. Below, you’ll find the basic standard mortgage loan limits and high-cost area limits, followed by the limit breakdown by CA county.
2020 maximum mortgage loan limits in California for FHA-insured loans
The 2020 basic standard mortgage limits for FHA-insured loans vary depending on how many family members you have.
| One-family | Two-family | Three-family | Four-family |
|---|---|---|---|
| $331,760.00 | $424,800.00 | $513,450.00 | $638,100.00 |
However, these limits increase in areas where real estate is particularly expensive. The 2020 high-cost area limits on FHA loans are:
| One-family | Two-family | Three-family | Four-family |
|---|---|---|---|
| $765,600.00 | $980,325.00 | $1,184,925.00 | $1,472,550.00 |
To find the limits in California for your particular area, review this list:
| County Name | State | One-Family | Two-Family | Three-Family | Four-Family |
|---|---|---|---|---|---|
| ALAMEDA | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| ALPINE | CA | $463,450 | $593,300 | $717,150 | $891,250 |
| AMADOR | CA | $355,350 | $454,900 | $549,850 | $683,350 |
| BUTTE | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| CALAVERAS | CA | $373,750 | $478,450 | $578,350 | $718,750 |
| COLUSA | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| CONTRA COSTA | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| DEL NORTE | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| EL DORADO | CA | $569,250 | $728,750 | $880,900 | $1,094,700 |
| FRESNO | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| GLENN | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| HUMBOLDT | CA | $345,000 | $441,650 | $533,850 | $663,450 |
| IMPERIAL | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| INYO | CA | $373,750 | $478,450 | $578,350 | $718,750 |
| KERN | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| KINGS | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| LAKE | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| LASSEN | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| LOS ANGELES | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| MADERA | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| MARIN | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| MARIPOSA | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| MENDOCINO | CA | $409,400 | $524,100 | $633,500 | $787,300 |
| MERCED | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| MODOC | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| MONO | CA | $529,000 | $677,200 | $818,600 | $1,017,300 |
| MONTEREY | CA | $672,750 | $861,250 | $1,041,050 | $1,293,750 |
| NAPA | CA | $764,750 | $979,000 | $1,183,400 | $1,470,700 |
| NEVADA | CA | $486,450 | $622,750 | $752,750 | $935,500 |
| ORANGE | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| PLACER | CA | $569,250 | $728,750 | $880,900 | $1,094,700 |
| PLUMAS | CA | $336,950 | $431,350 | $521,400 | $648,000 |
| RIVERSIDE | CA | $442,750 | $566,800 | $685,100 | $851,450 |
| SACRAMENTO | CA | $569,250 | $728,750 | $880,900 | $1,094,700 |
| SAN BENITO | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| SAN BERNARDINO | CA | $442,750 | $566,800 | $685,100 | $851,450 |
| SAN DIEGO | CA | $701,500 | $898,050 | $1,085,550 | $1,349,050 |
| SAN FRANCISCO | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| SAN JOAQUIN | CA | $448,500 | $574,150 | $694,000 | $862,500 |
| SAN LUIS OBISPO | CA | $690,000 | $883,300 | $1,067,750 | $1,326,950 |
| SAN MATEO | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| SANTA BARBARA | CA | $653,200 | $836,200 | $1,010,800 | $1,256,150 |
| SANTA CLARA | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| SANTA CRUZ | CA | $765,600 | $980,325 | $1,184,925 | $1,472,550 |
| SHASTA | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| SIERRA | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| SISKIYOU | CA | $331,760 | $424,800 | $513,450 | $638,100 |
| SOLANO | CA | $506,000 | $647,750 | $783,000 | $973,100 |
| SONOMA | CA | $704,950 | $902,450 | $1,090,850 | $1,355,700 |
| STANISLAUS | CA | $365,700 | $468,150 | $565,900 | $703,250 |
It’s important to figure out the loan limit in your area to ensure your looking at home prices within your budget.
Where do you go to apply for an FHA loan in California?
Not sure where to apply for an FHA loan in California? First, you will need to find an FHA-approved lender, but the good news is there are plenty to choose from.
To apply for an FHA loan in California, you will need to find a lender that is approved by the FHA. The lenders in the table below all work with FHA loans. Check which lender is the best match for you.
We recommend you narrow down your options and then reach out to at least three so you can find the best deal.
What about an FHA refinance in California?
If you have an FHA mortgage and would like to refinance it, you should consider the FHA Streamline refinance. The basic FHA refinance requirements are:
- Your mortgage must be FHA-insured.
- The refinance must provide you with tangible benefits, such as lower rates or a shorter term.
- You can’t be delinquent on your mortgage payments.
- You cannot cash out more than $500 with the refinance.
The same principle applies when comparing FHA refinance loans. Take your time to understand the real cost of the mortgage (including mortgage payments, fees, and points). Get rates from at least three lenders and see which one offers you the best overall deal.
The lenders above all work with FHA mortgages, but you can click here or check the lenders below if you would like a wider selection of FHA-approved lenders.
JW
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.
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