California FHA Loans: Complete Guide (2025)
Everything You Need to Know About FHA Financing in California
Quick Answer
California FHA loans require just 3.5% down payment with credit scores as low as 580, making them ideal for first-time buyers and those with limited savings. California FHA loan limits range from $498,257 in standard counties to $1,149,825 in high-cost areas like San Francisco and Los Angeles, allowing access to the state's expensive housing market with minimal down payment.
California FHA Loan Limits by County (2025)
FHA loan limits vary significantly across California based on county median home prices. Understanding your county's limit is essential for determining FHA eligibility.
FHA Loan Limits
| Limit Tier | Counties (Partial List) | Single-Family Limit |
|---|---|---|
| Highest Limit | San Francisco, Orange, Los Angeles, San Diego, Santa Clara | $1,149,825 |
| High-Cost | Santa Barbara, Santa Cruz, Napa, Sonoma | $900,000 - $1,149,825 |
| Standard Conforming | Sacramento, Riverside, San Bernardino | $806,500 |
| Floor Limit | Kern, Fresno, Tulare, Merced | $498,257 |
California FHA Loan Requirements
Credit Score Requirements
Minimum 580 for 3.5% down, or 500-579 for 10% down. Most CA lenders prefer 600-620+.
Income Requirements
DTI ratios up to 50% (or even 57% with compensating factors) are allowed, providing critical flexibility in high-cost California markets.
Down Payment Requirements
Minimum 3.5% down payment. The entire amount can be a gift from a family member, making it highly accessible for first-time buyers.
Property Requirements
The home must be your primary residence and meet FHA's minimum property standards for safety and soundness. Condos must be on the FHA-approved list.
FHA Mortgage Insurance (MIP)
FHA loans require two types of mortgage insurance: an Upfront Premium (UFMIP) and a monthly premium (MIP).
Upfront MIP (UFMIP)
A one-time fee of 1.75% of the loan amount, typically rolled into the loan balance.
Annual MIP
A monthly fee, usually 0.55% of the loan amount annually. On a $750k loan, this is about $344/month. For loans with <10% down, this MIP is for the life of the loan.
FHA vs. Conventional in California
Choose FHA When:
- Your credit score is between 580-680.
- You have a limited down payment (3.5%).
- You need a higher debt-to-income ratio to qualify.
- You are buying a 2-4 unit property to "house-hack".
Choose Conventional When:
- You have a strong credit score (700+).
- You have a larger down payment (10-20%).
- You want to avoid FHA's lifetime mortgage insurance.
- The property is a condo that isn't FHA-approved.
The California FHA Loan Process: Step-by-Step
- Get Pre-Approved: Submit your financial documents to an FHA-approved lender to determine your budget.
- Find a Home: Work with a real estate agent to find an FHA-eligible property within your county's loan limits.
- Make an Offer: Your agent will help you write a competitive offer, which includes your FHA financing details.
- Home Inspection & FHA Appraisal: An inspection checks the home's condition, while the FHA appraisal confirms its value and ensures it meets safety standards.
- Underwriting: The lender's underwriting team verifies all your documentation to issue final loan approval.
- Clear to Close: Once all conditions are met, you'll receive the final "Clear to Close" and schedule your signing.
- Closing: You'll sign the final documents, pay your down payment and closing costs, and get the keys to your new home.
California FHA Loan FAQs
Can I use an FHA loan for an investment property in California?
No, FHA loans require the property to be your primary residence for at least one year. However, you can use an FHA loan to buy a 2-4 unit property, live in one unit, and rent out the others.
How long after bankruptcy can I get an FHA loan in California?
Typically, you must wait 2 years after a Chapter 7 bankruptcy discharge or be at least 1 year into a Chapter 13 repayment plan with a record of on-time payments.
Can I get an FHA loan for a condo in California?
Yes, but the condominium complex must be on the FHA's approved list. You can search the HUD website to see if a specific complex is approved.