Santa Cruz County Home & Community Information

MY FIRST FHA 203K LOAN TRANSACTION IN SANTA CRUZ

FHA 203k loans have been around for awhile and we have all been hearing about them but I have rarely seen them put to use in Santa Cruz County.  When searching for homes for first time buyers we are often in a lower price range and come across many foreclosure homes or short sales in bad condition that would never qualify for a regular FHA loan.    For a first time buyer with limited cash reserves that needs to buy a lower priced home or foreclosure home an FHA 203k loan can be a great way to go.

My first FHA 203k loan transaction as a Realtor just closed last week.  The client was a young first time home buyer that wanted to buy a home priced under $300,000.  In Santa Cruz County you will not find many homes under $300k in good condition so we found a fixer and got into contract using an FHA 203k loan.  I have heard these FHA 203k loans can take 60 to 90 days to close but the excellent lender we used in this transaction had it done in less than 40 days!  There is a lot of work to do getting the bids right and all the conditions met but with teamwork we got it done.

Now that I know how an FHA 203k loan works and have had such success I can recommend it to my clients.  Also this lender with Wells Fargo did such a great job I am confident in recomending him.

Now the buyer has a great property at a great price that needs a little work and the bank is loaning him $35k to fix it up!  Pretty sweet deal!

Feel free to contact me for more details about FHA 203k loans and buying a foreclosure in Santa Cruz.

HOW FHA LOAN CHANGES WILL AFFECT LOW DOWN PAYMENT BUYERS IN SANTA CRUZ

FHA loans have become very popular loans for home buyers with low down payments.  With an FHA loan you can buy a home with as little as 3.5% down payment.  I have helped quite a few buyers purchase homes and condos in Santa Cruz in the past couple of years with FHA loans and it has gone really well.  They have mostly been 1st time buyers but not all.  Before the credit crunch FHA loans were not used often in Santa Cruz County because there were so many other programs for buyers with low down payments.  Now it seems they are pretty much the only way to go for buyers with low cash reserves. 

There have been and will be more changes coming to FHA loans that will affect buyers with low down payments.  It is going to become more expensive to obtain these loans in the future but the good news is that they are not raising the minimum down payment amount from 3.5% for now.

Here are a few of the changes coming up in FHA loans:

Mortgage insurance is required on FHA loans that have less than a 20% down payment.  The mortgage insurance premium is going to be increased this year from 1.75% to 2.25%. 

Seller credits to the buyer on FHA loans were allowed up to 6% and that is going to be changed to only 3%. 

Home buyers with less than stellar credit (580 credit score) may be required to put up to 10% down payment in order to purchase a home.

Another rule that has changed recently is the 90 day flipping rule.  Buyers will no longer have to wait 90 days to purchase a home that has transferred title in the previous 90 days.

For buyers with a low down payment looking to purchase a home this year these changes can really affect the amount you can qualify for.  Check with your local FHA lender to see what you can qualify for with these new rules.  I know several great FHA lenders that can help you, contact me and I will forward their information.

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