Buy a Home With as Little as 3.5% Down

An FHA loan is a mortgage backed by the Federal Housing Administration. When you get an FHA loan, the government insures the lender against loss if you default — which allows lenders to offer lower down payments and more flexible credit requirements than conventional loans. You pay for that government backing through mortgage insurance premiums (MIP). The loan itself comes from a private lender like a bank or mortgage company, not directly from the government.

The FHA itself allows credit scores as low as 500. With a score of 580 or higher, you qualify for the minimum 3.5% down payment. With a score between 500 and 579, you may still qualify but will need at least 10% down. Keep in mind that individual lenders can set their own "overlays" — minimum score requirements above the FHA floor. Give me a call and I'll tell you exactly where you stand today and what it would take to improve your position if needed.

FHA charges two types of mortgage insurance. The upfront MIP is 1.75% of the loan amount, typically rolled into your loan balance. The annual MIP ranges from 0.55% to 0.85% of the loan balance (paid monthly) depending on your loan amount, term, and down payment.

For most FHA loans made today (with less than 10% down on a 30-year term), the annual MIP stays for the life of the loan. If you put 10% or more down, MIP drops off after 11 years. One common strategy: start with FHA, build equity, then refinance into a conventional loan once you hit 20% equity and eliminate MIP altogether. I'll show you the numbers on that path during our call.

Absolutely. FHA loans are available across California, including Redding, Anderson, Shasta Lake, Cottonwood, Palo Cedro, and anywhere else in Shasta County. The 2025 FHA loan limit for Shasta County is $524,225 for a single-family home — which covers the majority of homes in the local market. If you're buying above that number, we'd look at a conventional or jumbo option instead.

Yes — and this is one of the most powerful combinations available. FHA is the most commonly paired loan type with California down payment assistance (DPA) programs, including CalHFA. Depending on your income and the program, DPA can cover your entire 3.5% down payment and sometimes closing costs too — meaning you could buy a home with very little or nothing out of pocket beyond reserves. Not everyone qualifies, and the programs have income and purchase price limits, but it's absolutely worth exploring on our call.

No. FHA loans are available to any buyer purchasing a primary residence, regardless of whether they've owned a home before. The only restriction is that FHA is for primary residences — you can't use it for a vacation home or investment property. If you previously owned a home but sold it (or lost it), you may still be eligible as long as you meet the standard waiting periods for any credit events like foreclosure or bankruptcy.

For 2025, the FHA loan limit in Shasta County is $524,225 for a single-family home. Limits are higher for multi-unit properties: $671,200 for a duplex, $811,275 for a triplex, and $1,008,300 for a fourplex. If you're purchasing above the single-family limit, we'd look at conventional financing instead — or a combination strategy.

FHA requires that the home be safe, sound, and secure. The FHA appraiser will flag issues like missing handrails, exposed wiring, roof damage, evidence of active water intrusion, peeling paint (on pre-1978 homes due to lead paint rules), and non-functional utilities. Most move-in-ready homes in Redding pass with no issues. Where FHA can run into trouble is with fixer-uppers, foreclosures, or older homes with deferred maintenance. If you're eyeing a rougher property, let me know early — there's an FHA 203(k) rehab loan that might be a better fit.

It depends on your credit score, down payment, and debt load. FHA is usually the better choice when your credit score is below 680, your debt-to-income is above 45%, or your down payment is less than 10% and your credit isn't strong enough for competitive conventional terms. Conventional becomes the better long-term choice if you have 10–20% to put down and a credit score above 700 — because PMI (conventional mortgage insurance) eventually drops off, while FHA MIP typically doesn't. There's no one-size-fits-all answer. The best thing you can do is run both scenarios with actual numbers — which is exactly what we'll do on our first call.