FHA Loans A Great Option For First-Time San Clemente Home Buyers
As mortgage interest rates have risen over the past year, potential San Clemente Real Estate buyers have been faced with paying a little more for their new home. While mortgage rates are still at historic lows, buyers are faced with having to come up with a higher down payment to take advantage of the lowest rates. However, there is a great option for home buyers, particularly ones buying their first home – an FHA loan. California has one of the highest FHA loan limits in the country at $729,750; as long as the loan amount is at or below this level, a first-time home buyer may qualify for an FHA-backed loan.
The features that make FHA loans so attractive to first-time home buyers are the low down payment and looser credit requirements. While buyers typically need to put down anywhere from 5-25% as a down payment, an FHA-backed loan may only require a 3.5% down payment – this will obviously help keep the savings account from being totally depleted. Regarding credit scores, conventional loans typically require credit scores in the mid 600s to mid 700s for qualification; for an FHA loan, a credit score around 600 may suffice. Keep in mind is that, due to the lower down payment and credit score requirements, FHA borrowers have to pay a higher PMI (private mortgage insurance) rate, which was recently raised to around 1.5% of the loan amount. Also, purchasing a San Clemente condo or town home with an FHA loan can sometimes be difficult as certain condo communities are not FHA approved; check with your Realtor to make sure an FHA loan will work with the community you desire.
There are approximately 80 current listings on the San Clemente real estate market, including San Clemente homes, San Clemente Condos and San Clemente Townhomes, that fall below the $729,750 loan limit of an FHA-backed loan. If you are having trouble qualifying for a conventional home loan, speak with your lender about the requirements for an FHA loan – this may be your best course to secure your new San Clemente home or condo.