What is FHA Financing

Flexible Qualification to Help Middle & Low-Income Buyers

The National Housing Act of 1934 created the Federal Housing Administration (FHA) to help first-time buyers and lower-income Americans purchase a home. Today, the US Department of Housing and Urban Development (HUD) insures FHA loans.


The FHA loan is a low down payment mortgage that provides flexible qualification options to buyers who marginally qualify under conforming loan programs. It is popular with first-time and middle-to-low income buyers.

Benefits You’ll Love About FHA Financing

Enjoy down payments as low as 3.5% of the home’s purchase price

Qualify with no maximum income limitation

Qualify for an FHA home loan even without a long credit history

No prepayment penalty

Types of FHA Loans

Below, you will find expandable sections that give you information on different types of FHA loans. If you are ready to apply for a loan, click here and it will take you to our secure online application. If you still have questions, our loan officers are just a phone call away (805.543.LOAN)

203(b) Fixed Rate Mortgage

The most popular FHA loan program is the 203(b) fixed rate mortgage loan. This loan helps middle- to low-income buyers compete in high-demand areas (San Luis Obispo County) by offering loose credit guidelines and flexible down payment options.

The Basics:


  • Down payment: as low as 3.5%
  • Credit score: as low as 550
  • Debt-to-income ratio: as high as 47% housing ratio and 57% total debt ratio
  • Gift payments: allowed; 100% can be a gift from a relative, non-profit, or government agency
  • Rate and Term: fixed and adjustable rate options
  • Ceiling: $417,000 ($561,200 for high balance in San Luis Obispo County; $625,500 for high balance in SB County)
  • Occupancy: primary residence only
  • Mortgage Insurance: yes; up front and monthly fees apply (Read more)

Streamline Refinance

The FHA Streamline Refinance is a simple way for FHA borrowers to lower their monthly mortgage payment by refinancing into a lower mortgage rate. Borrowers must display a history of consistent payments, and reduce their monthly payments by 5%. No appraisal, no income qualification, no asset documentation.

FHA One-Time-Close Construction Loan

Loan Requirements:


  • Credit: Minimum 530 FICO (limits to LTV/CLTV may apply)
  • Loan Term: Fixed Rate Mortgage (FRM): 10 – 30 year terms
  • Max LTV: 580+ FICO and No Score: 96.5% LTV calculated per FHA Guides
    <580 FICO: Maximum 90% LTV
  • Occupancy: Owner Occupancy Only
  • Propery Eligibility:
    • New Construction: Modular (off-frame only), Manufactured (double-wide or larger), and Traditional Construction.
    • Manufactured Homes: Engineer must certify foundation plans meet FHA guides. Must be titled as real property or have recorded affixation affidavit.
    • Loan may include simultaneous purchase of the land/lot or loan can be guaranteed for the construction of home on land/lot already owned by borrower.
  • Credit History: Borrowers with traditional credit histories and credit scores will be underwritten on their own merits. Non-traditional and derogatory credit history considered… (Read more)

Further Reading (From FAQ Page)

  • Low down payment loan programs (Read more)
  • Gift giving guidelines (Read more)
  • Mortgage insurance guidelines (Read more)
  • Credit qualification standards: FICO and Debt-to-Income (Read more)

203(k) Home Rehabilitation & Renovation

The 203(k) mortgage loan offers funds for home rehabilitation and renovation. Borrowers can get unlimited funding for cosmetic repairs and functional upgrades.



  • Roof, gutter, and downspouts replacement and repair
  • Heating, ventilation, plumbing, electrical, septic replacement and repair
  • Painting, flooring, and weatherization
  • Purchase and installation of appliances.

Click here for more information

FHA Back-to-Work Program

The FHA back-to-work program offers buyers the ability to purchase a home just 12 months after a negative credit event. Otherwise:

  • Foreclosure: 3 years from transfer of title date
  • Short Sale: 3 years from relinquished date
  • Bankruptcy (Chapter 7): 2 years from discharge date
  • Bankruptcy (Chapter 13): 2 years from discharge date; 1 year payout has elapsed & payment performance is satisfactory & BK approval
  • Deed-in-Lieu: 3 years from transfer of deed date

Click here for more information

GSFA Platinum Down Payment Assistance Program

The GSFA Platinum down payment assistance program was created to help low to moderate income homebuyers in the state of California purchase a home by providing down payment and/or closing cost assistance in the form of a non-repayable grant.

Click Here for More Information

The Program Income Limit for FHA, VA, and USDA First Mortgages

Step 1. Get Pre-Approved.

How Does Pre-Approval Work?

Getting pre-approved is as easy as 1-2-3!

1. Create an Account

Creating an account is fast, easy, secure and FREE! Your account enables you to easily modify your loan application and view the status of your loan anytime day or night.

2. Submit Information

When you register for a Loan Center account, you can submit a loan application online and the sensitive information that you provide will be transmitted securely.

3. Get Pre-Approved

Kick your feet up while we crunch the numbers. Pre-approval can be done very quickly if you provide a complete and accurate loan application and supporting documentation.

You have questions? We have answers.
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