Sacramento FHA Loan: The Best Low Down Payment Option for Homebuyers
If you’re looking to buy a home in Sacramento, but a large down payment is holding you back, an FHA loan could be the answer! These government-backed loans make it easier to qualify for a mortgage, offering low down payments, flexible credit requirements, and competitive interest rates.
Whether you’re a first-time homebuyer or looking to move into a new home, a Sacramento FHA loan can help you purchase a home with as little as 3.5% down—getting you into the housing market sooner.
What Is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). It’s designed to help buyers with limited savings or lower credit scores qualify for home financing. Unlike conventional loans, which typically require a larger down payment, an FHA loan allows buyers to put down as little as 3.5%.
This makes FHA loans a great choice for buyers in Sacramento, Roseville, Elk Grove, and surrounding areas who need an affordable path to homeownership.
How Do FHA Loans Work?
FHA loans provide several advantages for homebuyers, including:
✔️ Lower Down Payments – Buy a home with just 3.5% down (or 10% if your credit score is below 580).
✔️ Flexible Credit Guidelines – FHA loans have lenient credit score requirements.
✔️ Multiple Loan Term Options – Choose from 15-, 20-, 25-, or 30-year fixed-rate mortgages or a 5-year adjustable-rate mortgage (ARM).
✔️ No Prepayment Penalties – Pay off your mortgage early without extra fees.
FHA Loan vs. Conventional Loan: Which Is Better?
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Down Payment | 3.5% (10% for lower credit) | Typically 5%–20% |
| Credit Score | 580+ (500+ with 10% down) | 620+ |
| Mortgage Insurance | Required (MIP) | Required (PMI if <20% down) |
| Loan Terms | 15-30 years (fixed/ARM) | 10-30 years (fixed/ARM) |
| Primary Residence? | Required | Can be primary, second home, or investment property |
For many buyers, an FHA loan is the best option due to its lower down payment and flexible credit requirements. However, if you have a higher credit score and a larger down payment, a conventional loan may offer lower long-term costs.
Understanding FHA Mortgage Insurance
FHA loans require Mortgage Insurance Premiums (MIP), which protect lenders in case of default.
🔹 Upfront MIP – 1.75% of the loan amount, typically rolled into the mortgage.
🔹 Annual MIP – 0.45%–1.05%, added to monthly payments.
Unlike Private Mortgage Insurance (PMI) on conventional loans, which can be removed after reaching 20% equity, MIP lasts for the life of the loan (unless you put 10% down, in which case it drops off after 11 years).
Do You Qualify for an FHA Loan?
To qualify for an FHA loan in Sacramento, you’ll need to meet these basic requirements:
✅ Credit Score – 580+ to qualify for 3.5% down (or 500+ with 10% down).
✅ Debt-to-Income Ratio (DTI) – Typically 43% or lower (some exceptions apply).
✅ Steady Employment & Income – Lenders review job history and earnings.
✅ Primary Residence Requirement – FHA loans cannot be used for investment properties or vacation homes.
If you meet these requirements, an FHA loan could be your fastest path to homeownership!
How to Apply for an FHA Loan in Sacramento
1️⃣ Get Preapproved – Know how much home you can afford before you start house hunting.
2️⃣ Find a Home – Work with a local real estate agent to find a home that meets FHA guidelines.
3️⃣ Submit an Offer – Once accepted, your lender will order an FHA appraisal.
4️⃣ Loan Processing & Underwriting – Your lender will verify your financials and eligibility.
5️⃣ Close & Move In – Sign the paperwork, get your keys, and start enjoying your new home!
The FHA loan process is similar to a conventional loan, but it offers more flexibility on credit score and down payment requirements.
Who Should Consider an FHA Loan?
🏡 First-time homebuyers who need a lower down payment.
💳 Buyers with lower credit scores who still qualify for financing.
💰 Homebuyers who don’t have 20% down but want to buy now.
If you have strong credit and a larger down payment, a conventional loan may be a better fit.
Get Preapproved for a Sacramento FHA Loan Today!
Still have questions about FHA loans in Sacramento? We’re here to help!
📞 Call or text us at 916-465-6639
📩 Email us at hello@newwaymortgage.com
🖥️ Apply online HERE to get preapproved today!
🔹 Want expert mortgage tips? Subscribe to our YouTube channel at www.newwayhome.com! 🎥🏡
Get started today!
Fill out the questionnaire on this page to start a discussion about your mortgage needs today!
