Mortgage Information
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About Mortgages & Home Loans
Mortgages are probably the single most important aspect of buying a home. You may find the home of your dreams but if you are unable to obtain mortgage financing, you most likely will not be able to buy a home (unless you have all cash). Therefore, it is important to get a mortgage pre-qualification before beginning your home buying process as this helps you in the following ways:
- Limits you home search to only homes you can afford.
- Helps you in your real estate negotiations.
- Eliminates "surprises" during the home buying process.
- Allows you to know exactly how much money is required to buy a home.
- You will know what to expect as a monthly payment.
Schedule an appointment or ask questions to learn how much California Real Estate you can afford.
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Types of Mortgages
Review the links below and select the mortgage programs that you believe will best suite your real estate mortgage needs.
- Jumbo Mortgages - loan amount over $417,000
- FHA Loans - 3% down payment VA loans - 100% financing for veterans Conventional Mortgages - most common mortgage
- CalPERS loans - mortgages for CalPERS, LRS, and JRS members Construction loans - finance the construction of a home CHA loans ( Calhfa ) - first time home buyer loan program
- STRS loans - mortgages for members STRS retirement program
- Bad Credit Loans ( Sub Prime Mortgages ) - mortgages for those with bad credit
- Home Equity Loans - home equity loans, second mortgages and home equity line of credit loans
- Cal Vet Loans - special program for veterans buying a home in California
- FHA Streamline Refinance Loans - If you have a FHA loan your can do a FHA streamline refinance mortgage.
- Reverse Mortgage - information on reverse mortgage for seniors over 62
If you have any questions regarding mortgages, please email or call me.
What is the Federal Housing Administration (FHA)?
The Federal Housing Administration, generally known as "FHA", provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.
What is FHA Mortgage Insurance?
FHA mortgage insurance provides lenders with protection against losses as the result of homeowners defaulting on their mortgage loans. The lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner's default. Loans must meet certain requirements established by FHA to qualify for insurance.
Why does FHA Mortgage Insurance exist?
Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. There is more flexibility in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost to the homeowner will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property -whichever is longer.
Let FHA Loans Help You
FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal.
- Low down payments
- Low closing costs
- Easy credit qualifying
What does FHA have for you?
Buying your first home?
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.
Want a fixer-upper?
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.
Financial help for seniors
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer "yes" to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.
Want to make your home more energy efficient?
You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage.
How about manufactured housing and mobile homes?
Yes, FHA has financing for mobile homes and factory-built housing. We have two loan products – one for those who own the land that the home is on and another for mobile homes that are - or will be - located in mobile home parks.
For more info see web site: http://www.hud.gov/buying/loans.cfm
To learn more about loan products contact Jennifer Avellan at 310/346-7851
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Is FHA or Conventional Loan good for me?
Government sponsored loan programs, such as FHA loans, have been getting a lot of press lately. But, how does one know what real estate home loan is right for them. An FHA loan differs from a conventional mortgage loan? What are the advantages of each?
FHA: The Federal Housing Authority (FHA) was created in 1934 to help potential homeowners gain access to money to boost homeownership rates throughout the United States. FHA loan programs require very little money down on a new purchase (usually only 5% of the purchase price) and will lend up to 95% of the value of a home on a “cash out” refinance. This high loan-to-value ratio is the primary appeal of an FHA transaction.
The FHA is not a lender and does not actually make or guarantee home loans. They insure the loans we can assist you in obtaining.
FHA currently only offers three loan programs::
-30 Year Fixed
-15 Year Fixed
-5 Year Fixed
FHA Mortgage Insurance Premiums (MIP)
Every FHA loan requires Mortgage Insurance Premium (MIP) regardless of the down payment amount or loan to value. In addition, FHA loans require Up-Front Mortgage Insurance Premiums UPMIP). The UFMIP can be financed into the loan.
FHA also has maximum loan amount restrictions that differ from county to county. See below to view the maximum loan amount in your area.
Conventional loans: There are three types of conventional loans: conforming, super conforming and jumbo.
Conforming loans: A conforming loan requires a loan amount of $417,000 or less. Conforming loans offer a larger variety of Loan Programs than FHA with a wide array of lending options. A conforming loan generally requires a larger down payment for a purchase (usually at least 10%) and has more restrictive guidelines on getting cash out of the property for a refinance.
The big advantage of conforming loans is that they do not require Private Mortgage Insurance (PMI) if the loan amount of the new first mortgage is 80% or less of the value of the home. The elimination of PMI can offer a significant savings over the life of the loan. Additionally, conforming loans offer interest only options. FHA currently does not allow interest only payments.
Super Conforming Loans: On January 1, 2009 the “super conforming” loan was created for loan amounts up to $625,500. These new higher loan limits were meant to be crossover loans for high cost areas where housing values tend to be higher. Generally requires a larger down payment for purchases minimum from 10%-20% depending on the type of program and credit score. Super conforming loans are only available in certain counties and generally have more stringent lending guidelines than a conforming loan. See Below to see the maximum super conforming loan amount in your county.
Jumbo loans: A jumbo loan is any loan amount over the super conforming loan limit. Jumbo loans generally have slightly tighter lending standards and may require a down payment of at least 10% of the purchase price. Jumbo loan programs are as diverse as conforming loan programs and also do not require PMI if the loan amount is less than 80% of the value of the home.
In Summary: To summarize, it is really all about loan-to-value. If you plan on putting down a small down payment, than an FHA loan is most likely your best bet. But, if you are putting down a larger down payment, a real estate home loan conventional program will be the way to go.
Choosing whether an FHA or conventional real estate home loan is best suited for you, is important to choose an experienced FHA Loan Officer. Let an expert help you choose which option is best for you. Ask me about this.
Mortgage Insurance Premiums (MIP): FHA mortgage insurance, typically referred to as MIP, is the one closing cost that is unique to FHA mortgage programs. Note, Every FHA mortgage must have mortgage insurance regardless of the amount of the down payment.
There are two types of mortgage insurance for FHA insured loans – Up-front Mortgage Insurance Premiums and Monthly Mortgage Insurance Premiums.
Up-front Mortgage Insurance Premium (UFMIP): UFMIP is calculated at 1.75% of the base loan amount on all loans, regardless of the down payment amount. This insurance protects the lender against losses in the event that the borrower defaults on the loan. NOTE: The entire amount of the UFMIP can be financed into the loan amount.
For example:
• If the FHA loan amount is $100,000 (base loan amount)
• The mortgage insurance premium would be $1,750 ($100,000 x 1.75%)
• The mortgage amount including MIP would be $101,750 ($100,000 + $1,750)
What really happens during an FHA mortgage transaction is that the borrower owes FHA a lump sum mortgage insurance premium. The lender making the FHA loan will actually lend the money for the premium to the borrower and send the money to FHA so that the mortgage will be insured.
Monthly Mortgage Insurance Premium: In addition to the UFMIP, there may be a monthly premium due as well. The monthly premium is .55% of the base loan amount. For example, on a 30 year fixed loan, the monthly payment would be calculated as follows:
$100,000 x .55% = $550.00 / 12 months = $45.83 per month
There are two types of monthly mortgage insurance for FHA mortgages:
Condominiums - Monthly mortgage insurance on condominiums is stable at .55% over the life of the loan.
All other properties – The amount of monthly MIP and the length of the premium depends upon the amount of the down payment or the loan to value.
For 30 year mortgages closed after January 1, 2001, the monthly insurance premium is eliminated when the loan balance is 78% of the original purchase price, provided the premium has been paid for at least five years.
FHA Minimum Down Payment: Effective January 1, 2009, the minimum down payment required on an FHA loan is 5.0% of the purchase price. Any deposit (usually called earnest money) that you are required to give to your realtor at the time of an accepted purchase contract will count towards your 5% down payment. The appraisal fee collected at the time of inspection will also count towards your 5% down payment. If, for example, you are purchasing a $100,000 house, your minimum down payment required would be $5,000. If your seller/realtor required you to put down $500 in earnest money on top of the $300 for your appraisal, your down payment would be lowered to $4,200 ($5,000 - $500 - $300 = $4,200).
Down Payment “As A Gift”: If a borrower does not have 5% of his or her own money to put down towards the home purchase, FHA allows that amount to be in the form of a gift to the borrower. The gift must be from a qualified source, such as a family member, employer or significant other. The source of the gift must be able to provide proof that they have the money in an account registered in their name prior to transfer to the borrower. In some areas, this gift may also be grant money from a state or local municipality, if such funds are available.
Closing Costs: Borrowers closing costs involve many of the typical costs associated with a mortgage loan, such as appraisal, survey, title insurance, etc. However, FHA recognizes that a borrower has limited funds and allows the borrower to finance a certain percentage of these costs to calculate the maximum mortgage a borrower can obtain.
Seller Paid Costs: Sellers or other third parties such as real estate agents, builders, developers, or combination of parties can contribute up to 6% of the property’s sale price towards the buyers actual closing costs, prepaid expenses, discount points and other concessions. Closing costs normally paid by the borrower are considered contributions if paid by the seller. If any of the allowable closing costs are paid by the seller or other interested parties, they cannot be included as part of the borrowers required 5% cash investment.
Other Factors to Consider:
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Customary Closing Costs |
City Transfer Tax | |||
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Item |
Who Normally Pays |
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City |
Tax Calculation |
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Recording Fees - Deed |
Buyer |
Culver City |
$4.50 per $1,000 | |
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Recording Fees - Trust Deed |
Buyer |
Los Angeles City |
$4.50 per $1,000 | |
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Title Insurance for Buyer |
Seller |
Pomona |
$2.20 per $1,000 | |
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Escrow Fees |
Split |
Redondo |
$2.20 per $1,000 | |
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County Transfer Tax |
Seller |
Santa Monica |
$3.00 per $1,000 | |
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City Transfer Tax |
Seller |
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Lenders Fees |
Buyer |
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New FHA Loan Limits
Los Angeles County and Orange County FHA loan limits decreased on January 1, 2009. The FHA has now restored the higher limits in both Los Angeles and Orange Counties. What does that mean to today’s home buyers? This means that buyers can qualify for higher loans on homes once again. This is true for all residential loans, including; homes, condos and residential investment property under 4 units.
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Current FHA Loan Limits |
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Maximum Loan Amount |
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Single Family |
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$729,750 |
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Duplex |
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$934,200 |
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Tri-plex |
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$1,129,250 |
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Four-plex |
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$1,403,400 |
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Mortgage Calculator
Use our mortgage calculator to calculate the monthly mortgage payment of the homes you are interested in to narrow your search of California homes for sale to only those homes you can afford. This helps buyers in making some decisions around financing your new home.
This mortgage calculator will calculate the monthly mortgage payment based on the required mortgage loan amount, current mortgage rates, and loan terms. You may research mortgages for more information regarding qualifying for a home loan.
How to calculate a mortgage for buying a home:
1.Subtract your estimated down payment from the price of the home you wish to buy and enter the value in "Loan Amount" (Remember that if the down payment is less than 20% of the sale price you will have the added expense of Mortgage Insurance which is not figured into this calculation.)
2. Estimate Annual Property Tax and Homeowners Insurance and enter these values.
3. Each time you change a value hit "Calculate Now" to see what the effect is.
Mortgage Qualification Calculator
This calculator will help you determine how much money you qualify to borrow. The results are informal. You will be subject to a credit approval from your financial institution taking into consideration existing debt load, amount of down payment, income and other variables.
Mortgage Payment Calculator & Amortization Table
This calculator will help you determine what your mortgage payments will be based on purchase price, interest rate and mortgage term, as well as other factors. The amortization table shows what the interest and principal payments will be over the term of the mortgage.
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MAXIMUM FHA MORTGAGE AMOUNTS
| 4.250% | 4.500% | 5.000% | 5.250% | |||||||
| Sales | Tot Cash | Maximum | PITI & | Reqd. | PITI & | Reqd. | PITI & | Reqd. | PITI & | Reqd. |
| Price | Required | Loan Amt. | MMI | Income | MMI | Income | MMI | Income | MMI | Income |
| 100,000 | 8,260 | 97,465 | 673 | 1,496 | 688 | 1,528 | 717 | 1,594 | 732 | 1,627 |
| 110,000 | 8,846 | 107,211 | 741 | 1,646 | 757 | 1,681 | 789 | 1,753 | 805 | 1,790 |
| 120,000 | 9,432 | 116,958 | 808 | 1,796 | 825 | 1,834 | 861 | 1,912 | 879 | 1,952 |
| 130,000 | 10,018 | 126,704 | 875 | 1,945 | 894 | 1,987 | 932 | 2,072 | 952 | 2,115 |
| 140,000 | 10,604 | 136,451 | 943 | 2,095 | 963 | 2,140 | 1,004 | 2,231 | 1,025 | 2,278 |
| 150,000 | 11,190 | 146,197 | 1,010 | 2,245 | 1,032 | 2,293 | 1,076 | 2,390 | 1,098 | 2,440 |
| 160,000 | 11,776 | 155,944 | 1,077 | 2,394 | 1,100 | 2,445 | 1,147 | 2,550 | 1,171 | 2,603 |
| 170,000 | 12,362 | 165,690 | 1,145 | 2,544 | 1,169 | 2,598 | 1,219 | 2,709 | 1,245 | 2,766 |
| 180,000 | 12,948 | 175,437 | 1,212 | 2,694 | 1,238 | 2,751 | 1,291 | 2,869 | 1,318 | 2,929 |
| 190,000 | 13,534 | 185,183 | 1,279 | 2,843 | 1,307 | 2,904 | 1,363 | 3,028 | 1,391 | 3,091 |
| 200,000 | 14,120 | 194,930 | 1,347 | 2,993 | 1,376 | 3,057 | 1,434 | 3,187 | 1,464 | 3,254 |
| 210,000 | 14,706 | 204,676 | 1,414 | 3,143 | 1,444 | 3,210 | 1,506 | 3,347 | 1,537 | 3,417 |
| 220,000 | 15,293 | 214,423 | 1,481 | 3,292 | 1,513 | 3,362 | 1,578 | 3,506 | 1,611 | 3,579 |
| 230,000 | 15,879 | 224,169 | 1,549 | 3,442 | 1,582 | 3,515 | 1,649 | 3,665 | 1,684 | 3,742 |
| 240,000 | 16,465 | 233,916 | 1,616 | 3,591 | 1,651 | 3,668 | 1,721 | 3,825 | 1,757 | 3,905 |
| 250,000 | 17,051 | 243,662 | 1,684 | 3,741 | 1,719 | 3,821 | 1,793 | 3,984 | 1,830 | 4,067 |
| 260,000 | 17,637 | 253,409 | 1,751 | 3,891 | 1,788 | 3,974 | 1,865 | 4,144 | 1,904 | 4,230 |
| 270,000 | 18,223 | 263,155 | 1,818 | 4,040 | 1,857 | 4,127 | 1,936 | 4,303 | 1,977 | 4,393 |
| 280,000 | 18,809 | 272,902 | 1,886 | 4,190 | 1,926 | 4,279 | 2,008 | 4,462 | 2,050 | 4,556 |
| 290,000 | 19,395 | 282,648 | 1,953 | 4,340 | 1,995 | 4,432 | 2,080 | 4,622 | 2,123 | 4,718 |
| 300,000 | 19,981 | 292,395 | 2,020 | 4,489 | 2,063 | 4,585 | 2,151 | 4,781 | 2,196 | 4,881 |
| 310,000 | 20,567 | 302,141 | 2,088 | 4,639 | 2,132 | 4,738 | 2,223 | 4,940 | 2,270 | 5,044 |
| 320,000 | 21,153 | 311,888 | 2,155 | 4,789 | 2,201 | 4,891 | 2,295 | 5,100 | 2,343 | 5,206 |
| 330,000 | 21,739 | 321,634 | 2,222 | 4,938 | 2,270 | 5,044 | 2,367 | 5,259 | 2,416 | 5,369 |
| 340,000 | 22,325 | 331,381 | 2,290 | 5,088 | 2,338 | 5,197 | 2,438 | 5,418 | 2,489 | 5,532 |
| 350,000 | 22,911 | 341,127 | 2,357 | 5,238 | 2,407 | 5,349 | 2,510 | 5,578 | 2,562 | 5,694 |
| 360,000 | 23,497 | 350,874 | 2,424 | 5,387 | 2,476 | 5,502 | 2,582 | 5,737 | 2,636 | 5,857 |
| 370,000 | 24,083 | 360,620 | 2,492 | 5,537 | 2,545 | 5,655 | 2,653 | 5,897 | 2,709 | 6,020 |
| 380,000 | 24,669 | 370,367 | 2,559 | 5,686 | 2,614 | 5,808 | 2,725 | 6,056 | 2,782 | 6,182 |
| 390,000 | 25,255 | 380,113 | 2,626 | 5,836 | 2,682 | 5,961 | 2,797 | 6,215 | 2,855 | 6,345 |
| 400,000 | 25,801 | 389,860 | 2,690 | 5,978 | 2,748 | 6,106 | 2,865 | 6,367 | 2,925 | 6,500 |
| 410,000 | 26,386 | 399,606 | 2,758 | 6,128 | 2,816 | 6,259 | 2,937 | 6,526 | 2,998 | 6,663 |
| 420,000 | 26,971 | 409,353 | 2,825 | 6,277 | 2,885 | 6,411 | 3,009 | 6,686 | 3,071 | 6,826 |
| 430,000 | 27,556 | 419,099 | 2,892 | 6,427 | 2,954 | 6,564 | 3,080 | 6,845 | 3,145 | 6,988 |
| 440,000 | 28,141 | 428,846 | 2,959 | 6,576 | 3,023 | 6,717 | 3,152 | 7,004 | 3,218 | 7,151 |
| 450,000 | 28,726 | 438,592 | 3,027 | 6,726 | 3,091 | 6,869 | 3,223 | 7,163 | 3,291 | 7,313 |
| 460,000 | 29,311 | 448,339 | 3,094 | 6,875 | 3,160 | 7,022 | 3,295 | 7,322 | 3,364 | 7,476 |
| 470,000 | 29,896 | 458,085 | 3,161 | 7,025 | 3,229 | 7,175 | 3,367 | 7,481 | 3,437 | 7,638 |
| 480,000 | 30,481 | 467,832 | 3,228 | 7,174 | 3,297 | 7,327 | 3,438 | 7,641 | 3,510 | 7,801 |
| 490,000 | 31,066 | 477,578 | 3,296 | 7,324 | 3,366 | 7,480 | 3,510 | 7,800 | 3,583 | 7,963 |
| 500,000 | 31,601 | 487,325 | 3,359 | 7,464 | 3,431 | 7,623 | 3,577 | 7,950 | 3,652 | 8,116 |
SOURCE:
U.S. Department of Housing and Urban Development
451 7th Street S.W., Washington, DC 20410
Telephone: (202) 708-1112 TTY: (202) 708-1455
