2010 will be another big year for Orange County First Time Home Buyers and the FHA loan program. After several years of the FHA program seeing little action, nearly 35% of all home loans in Orange County were FHA. Orange County home buyers also increasingly used the VA loan program, which offers 100% financing.

There are no special qualifications a home buyer must have get an FHA loan. Not only does FHA only require a 3.5% down payment, but also the program is fairly flexible with credit scoring. Also, FHA will allow higher debt to income ratios than most Conventional loans programs, such as Fannie Mae and Freddit Mac. Realistically, if a buyer has less than 20% down payment, then FHA will be their best loan option. If a home buyers FICO score is less than 680, they may be better off with an FHA loan even if they have 20% down payment.

One year ago most lenders allowed FICO scores on an FHA loan to be as low as 580. Now, at the beginning of 2010, most lenders require a minimum FICO score of 640, with a few even wanting scoresof at least 660. This is still more flexible that Fannie Mae and Freddie Mac. Also, while Fannie Mae recently decreased their debt to income ratios to 45%, FHA will still approved buyers will debt to income ratios as higher as 55%, and that is even with the minimum 3.5% down payment.

For most of 2009, mortgage interest rates in Orange County were very low. Most Orange County First Time Buyers were able to get an interest rate in the 4.5% to 5.5% range for the last 12 months. We have started 2010 in the same range, although edging towards the upper end of that range. It is difficult to forecast where interest rates will go as year progresses, but for now rates remain extremely low.

First Time Buyer Tax Credit of $8,000 is Still Going!

The First Time Buyer Tax Credit continues into 2010. New home buyers have until April 30 to have a signed purchase contract, and then June 30 to close escrow on their new home to qualify for the credit.  This credit essentially means the government is giving money to home bueyrs to purchase a home. Taken in conjunction with the fact that home prices in Orange County have dropped to levels that make a home payment comparable to a rent payment, why wait any longer.

The first step in buying a home is FHA or VA Loan PreApproval. Home buyers need to find an experienced Orange County Loan Officer who can give them several loan options and scenarios, and walk them through the process. FHA and VA PreApproval is an easy process and doesn't cost a dime. Once Approved, the home buyer will know what price range to shop for, saving time and frustration.

Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Frost Mortgage Lending Group for more information about an Orange County, CA home loan.  877-786-4243 x 7.

www.OCFHALoans.com

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Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.

877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com

* Licensed by Department of Corporations under the California Residential Mortgage Lending Act. PRMI Branch License 813F487.