California FHA Loans
3.5% Down | 580 Credit Score

An FHA loan is a mortgage insured by the Federal Housing Administration. Because the government backs these loans, lenders can offer more flexible qualification requirements including lower credit scores (580+) and down payments (3.5%). You'll pay mortgage insurance premiums (MIP) which protect the lender if you default. FHA loans are popular among first-time California homebuyers.

You need a minimum 580 credit score to qualify for an FHA loan with 3.5% down. If your score is between 500-579, you can still qualify but need 10% down. Most California FHA lenders prefer 620+ for the smoothest approval process, but LendyWendy matches you with lenders who specialize in lower credit profiles.

California FHA loan limits for 2026 range from $498,257 in standard areas to $1,249,125 in high-cost counties like Los Angeles, San Francisco, and Orange County. San Diego County's limit is $1,077,550. These limits are the same as conforming loan limits in most California counties due to high home prices.

FHA requires two types of mortgage insurance: an upfront MIP of 1.75% of the loan amount (can be financed) and annual MIP of 0.55% of the loan amount paid monthly. On a $500,000 loan, that's $8,750 upfront and about $229/month. Unlike conventional PMI, FHA MIP lasts for the life of the loan unless you refinance.

Yes! FHA allows 100% of your down payment and closing costs to come from gift funds. Acceptable donors include family members, employers, labor unions, close friends with documented relationship, and government down payment assistance programs. The donor must provide a gift letter stating no repayment is expected.

FHA is better if you have lower credit (below 680), limited down payment funds, or higher debt ratios. Conventional is better if you have good credit (680+) because PMI can be cancelled at 20% equity. FHA mortgage insurance lasts the life of the loan. LendyWendy compares both options for your situation.

FHA loans can be used for 1-4 unit properties as long as you live in one unit as your primary residence. This includes single-family homes, condos, townhouses, and multi-family properties. FHA-approved condos must meet specific requirements. Investment properties and vacation homes don't qualify for FHA financing.

FHA loans typically take 30-45 days to close, sometimes longer than conventional loans due to stricter appraisal requirements. FHA appraisers must verify the property meets minimum safety and habitability standards. With a prepared application and responsive borrowers, closings can happen in 30 days.