The San Diego Federal Housing Administration (FHA) home loan program is one of the most popular home purchasing and refinancing mortgage programs. The following guide will get you familiarized with this important San Diego home loan program. Click here for the San Diego VA home loan program.

The San Diego FHA home loan program was created to help increase homeownership and has been a huge success. FHA has made buying a San Diego home easier and less expensive than other types of real estate home loan programs by allowing many more borrowers to qualify for a home loan. Although not restricted to first-time home buyers, San Diego FHA home loans are well suited for them. Many move-up buyers use the FHA home loan program as well.

Anyone may apply for a San Diego FHA home loan program as long as they do not have more than one FHA home loan at any one time, and they intend to live in the property. You may also apply for a San Diego FHA loan even if you already own another non-FHA insured property. However, the current loan-to-value must not exceed 75% on that property in order to be eligible for a new FHA home loan.

The Economic Stimulus Act of 2008 will temporarily raise the loan limit to $729,250 through December 31, 2008. The limit is based on housing costs for each county. Other home loan limits apply for two, three, and four unit properties.Some important advantages of the San Diego FHA home loan program are:

Minimal down payment and closing costs.
Down payments are only 3% of the purchase price, and with assistant programs it can be zero down.
Money given to you as a gift can be used for the down payment and/or closing costs.
You are not required to have money (called reserves) in your bank account after your purchase.
Not only are closing costs regulated by FHA, but the seller can help you pay for a percentage them.

Easier credit qualifying guidelines than conventional loans.
No minimum credit (FICO) scores or minimum requirements. In fact, you don't need a credit score!
You can purchase or refinance only two years after a bankruptcy and three years after a foreclosure.

More lenient debt ratios and job requirement guidelines.
You are allowed to have more debt than conventional home loans.
You can be employed for less than the normal requirement of two years, in some cases.
Self-employed individuals can qualify with less restrictions.

Highlights of the Most Popular San Diego FHA Home Loan Programs

Purchases:
You must intend to live in the property; FHA is not intended for investors
Allowable properties include single family homes, condos, townhomes, and PUDs
Condos and townhomes must be in an approved Housing and Urban Developement project
While there isn't a maximum sales price, there is a maximum unit loan limit by county
You may own non-FHA rental property (LTV 75% or lower) and still apply for an FHA loan
Only a 3% down payment is required but with available assistance can be no down paymen

Fixed Rate:
30 and 15 year terms available, fully amortized;
No pre-payment penalties; can be refinanced at anytime

Loan Amounts:
The maximum standard San Diego FHA loan amount is $362,790, higher amounts are FHA Jumbos

3/1 and 5/1-Year Adjustable Rate Mortgages (ARM):
Some of the best ARMs available due to a 1% adjustment interval cap rate and 5% lifetime cap. (most conventional ARMs have a 2% adjustment interval cap rate and 6% lifetime cap);
Designed to protect borrowers from larger payment increases common with conventional loans;
Adjusts once each remaining year;
SInce the interest rate is not a "teaser rate" it starts slightly higher than other conventional ARMs;
Allows you to qualify for a higher purchase price and higher loan amount.

FHA 2/1 Buydown:
Provides stability of a fixed rate loan with the benefit of a lower initial interest rate and payment;
Prepaid interest is paid as a fee on fixed rate mortgages to lower (buy down) the interest rate for one or two years. The fee is the difference in interest the lender would normally have received;
Interest rate climbs 1% after first twelve months on 1-year buy down, and another 1% after another twelve months if a 2-year buy down. Minimally affects your monthlr payments;
Allows borrowers to have more purchasing power with less payment. Can refinance at almost anytime.

Streamline and Cash-out Refinances:
Easily change the rate and term of your current San Diego FHA home loan;
No cost refinance option available;
Cash-out up to 85% of your homes current equity, within FHA maximum loan limit, for any use;
Reduced paperwork and costs for streamline refinances;
Consolidate debts to a lower monthly payment and interest rate;
Able to refinance sooner than with conventional refinancing, much more lenient guidelines.

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