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Buy your first home with a lower down payment and more forgiving credit
FHA loans were built for buyers who have steady income and a real plan but not a perfect credit file or a 20% down payment. As a broker, we compare FHA lenders to find the rate and terms that actually fit your situation in Sonoma County and across California.
FHA home loans let owner-occupant buyers purchase with as little as 3.5% down and credit scores starting at 580, with flexible debt-to-income rules and allowable gift funds. North Bay Capital shops multiple FHA lenders to match first-time, lower-credit, and low-down-payment buyers with the right loan.
Programs we broker
The options under fha loans — and the right fit for each.
FHA 203(b) Standard Purchase Loan
The classic FHA loan — 3.5% down, flexible credit, owner-occupied.
This is the FHA loan most people mean when they say 'FHA loan.' It's a fixed or adjustable mortgage insured by HUD for buying a primary residence — single-family, an approved condo, a manufactured home on a permanent foundation, or a 2-4 unit property you'll live in.
The pull for most borrowers is the down payment and credit flexibility: 3.5% down at a 580 FICO, 10% down between 500 and 579. Gift funds are allowed for the entire down payment, debt-to-income ratios are more forgiving than conventional, and the loan is fully assumable. Tradeoff: you pay an upfront mortgage insurance premium (financed into the loan) plus an annual MIP that stays for the life of the loan in most cases.
- First-time buyer with limited savings
- Credit score in the high 500s to low 600s
- House-hacking a duplex, triplex, or fourplex
- Buyer using a family gift for the down payment
FHA 203(k) Standard Rehab Loan
Buy the fixer and fund the full renovation in one FHA loan.
The 203(k) Standard is for homes that need real work — structural repairs, room additions, foundation, major systems, a gut remodel, even moving load-bearing walls. You finance the purchase price plus the renovation budget in a single FHA mortgage based on the after-improved value, then draw from an escrow account as the work gets done.
Because the scope is significant, HUD requires a 203(k) Consultant to write the work write-up and inspect each draw. There's no hard cap on rehab dollars other than the FHA county loan limit, so it scales well for serious projects. You still get the 3.5% down and flexible credit of standard FHA. Plan for a longer timeline — 45 to 60 days is typical — and a licensed contractor signed up before closing.
- Buying a distressed property in Sonoma County to remodel
- Structural repairs or foundation work
- Adding square footage or an ADU-style addition
- Full gut renovation of a dated home
FHA 203(k) Limited (Streamlined-K) Rehab Loan
Cosmetic and minor repairs up to roughly $75,000 — no consultant required.
The Limited 203(k) — still called the Streamlined-K by a lot of us — is the lighter version for non-structural work: kitchen and bath remodels, flooring, paint, roofs, windows, HVAC, appliances, accessibility upgrades. No structural changes, no foundation work, no room additions.
It's simpler than the Standard 203(k): no HUD consultant, less paperwork, and a faster close. HUD raised the cap to approximately $75,000 in total rehab costs (verify the current figure for your scenario — it's adjusted periodically). Same 3.5% down, same FHA credit guidelines. Good fit for a livable house that needs a freshen-up rather than a rebuild.
- Kitchen and bath update on a livable home
- New roof, HVAC, or windows after closing
- Cosmetic refresh on a dated but solid property
- Accessibility modifications for an aging-in-place buyer
FHA 203(h) Disaster Victim Loan
100% financing for households whose home was destroyed in a Presidentially declared disaster.
203(h) exists for people who lost their primary residence in a federally declared disaster — wildfires, floods, earthquakes. In Sonoma and Napa counties this comes up after major fire events. If your previous home was in a Presidentially declared disaster area and was destroyed or damaged to the extent that reconstruction or replacement is needed, FHA will finance 100% of the new home with no down payment required.
You have to apply within one year of the disaster declaration. Credit and income guidelines are more forgiving than standard FHA, recognizing that displacement does damage to financial profiles. The loan can be used to buy a replacement home anywhere in the country, not just in the disaster area. I've helped fire-displaced families in our region use this — it's an underused tool.
- North Bay wildfire displacement
- Replacement home after a federally declared flood or earthquake
- Rebuilding credit standing after disaster-related hardship
- Relocating out of a disaster zone to a new community
FHA One-Time Close Construction-to-Permanent Loan
Build a new home with one FHA closing, one set of fees, and 3.5% down.
FHA's One-Time Close (OTC) lets you finance the lot, the construction, and the permanent mortgage in a single loan with one closing up front. During the build, the loan acts like a construction line; when the home is finished and the certificate of occupancy issues, it converts automatically to a standard FHA 30-year mortgage with no requalification, no second appraisal, and no second set of closing costs.
Down payment is 3.5% of total cost — land plus construction. You lock the permanent rate at the start, which is a real advantage when rates are volatile. The builder has to be FHA-approved and licensed. This is our flagship for buyers in Sonoma County and across California who want a new build but can't carry a two-loan, two-closing structure. We have a dedicated guide on this product — it's worth reading before you talk to a builder.
- Owner-builder financing a new home on raw or finished land
- Buyer who wants to lock a rate before construction begins
- First-time buyer building rather than buying existing inventory
- Replacing a destroyed home on land you already own
FHA Streamline Refinance
Refi an existing FHA loan with no appraisal and minimal paperwork.
If you already have an FHA loan and want a lower rate or payment, the Streamline is the fastest path. No appraisal is required, no new income verification in most cases, and credit documentation is light. The qualifying standard is essentially: are you current on your existing FHA mortgage and does the refinance produce a net tangible benefit (lower rate, lower payment, or moving from ARM to fixed).
Two flavors — credit-qualifying and non-credit-qualifying — depending on your situation. You'll pay the upfront MIP again, but you get a partial refund of the MIP from your existing loan if you refinance within the first 3 years. Closing costs can be rolled in via a slightly higher rate. Underwater on the loan? Doesn't matter — no appraisal.
- Lower rate on a current FHA mortgage
- Drop from an FHA ARM to a fixed rate
- Refinance even if the home value has dropped
- Quick refi without ordering an appraisal
FHA Cash-Out Refinance
Pull equity out of your home up to 80% LTV with FHA's flexible credit guidelines.
FHA Cash-Out lets you refinance any existing mortgage (FHA, conventional, VA, USDA, or owned free and clear) into a new FHA loan and take cash at closing. Max loan-to-value is 80% of the appraised value, and you need to have owned and occupied the home as your primary residence for at least 12 months.
The reason borrowers reach for FHA cash-out instead of conventional is usually credit — FHA will work with scores into the 500s where conventional cash-out typically wants 680+. You will pay both upfront and annual MIP on the new loan, so we'll run the math against a conventional or HELOC alternative before pulling the trigger. Good tool for debt consolidation, home improvements, or freeing up capital when conventional won't approve.
- Debt consolidation with lower-credit profile
- Home renovation funding without a 203(k)
- Pulling equity when conventional cash-out is declined
- Refinancing a non-FHA loan into FHA to access cash
Building from the ground up? See the FHA Construction Loan.
The same FHA flexibility — 3.5% down, FICO from 580 — applied to a build, not a purchase. One loan covers the lot, the build, and your permanent mortgage. One closing, one set of fees.
Explore FHA Construction →
Calculators for this loan
Mortgage Payment & Amortization
Monthly payment, full amortization schedule, and interest totals.
Mortgage Affordability
How much home you can comfortably afford based on income and debts.
Debt-to-Income
Front-end and back-end DTI versus lender thresholds.
FHA 203(k) Max Mortgage
HUD-92700 worksheet for Standard and Limited 203(k) renovation. Purchase + Refi LTV factors, full rehab cost stack, $75K Limited cap, UFMIP.
What people ask before they apply
What credit score do I need for an FHA home loan?
FHA's published minimums are 580 to qualify for the 3.5% down payment and 500 to 579 for a 10% down payment. In practice, individual lenders often set their own higher floors, sometimes 600 or 620, especially on renovation loans. Because we are a broker, we can shop the file to lenders whose credit overlays actually match your score rather than sending you to a single underwriter.
How much is the down payment on an FHA loan in California?
With a credit score of 580 or above, the minimum down payment is 3.5% of the purchase price. On a $600,000 home that is $21,000. The entire down payment can come from documented gift funds from a family member, which is one reason FHA is popular with first-time buyers who have steady income but limited savings.
What is FHA mortgage insurance (MIP) and how long does it last?
FHA loans carry two mortgage insurance charges: an upfront premium of 1.75% of the loan amount, usually financed into the balance, plus an annual premium paid monthly. The annual premium runs roughly 0.15% to 0.75% depending on your loan amount, term, and down payment, with most buyers near the middle of that range. If you put less than 10% down, MIP stays for the life of the loan; with 10% or more down it can fall off after 11 years. These figures change periodically, so verify the current rate for your scenario.
What are the FHA loan limits in Sonoma County and California?
FHA limits are set by county and adjusted yearly. For 2026, the one-unit FHA limit in Sonoma County is approximately $861,350, while the statewide California floor is around $541,287 and the high-cost ceiling is about $1,249,125. Multi-unit limits are higher. Confirm the current figure for your specific county and property before you shop, since these numbers move each year.
Can I use FHA as a first-time home buyer?
Yes. FHA is one of the most common loans for first-time buyers because of the low down payment, flexible credit standards, and allowance for gift funds. FHA does not actually require that you be a first-time buyer, but the program's structure tends to fit that group well, including buyers across Sonoma County and the North Bay who are stretching to get into their first home.
Is an FHA loan better than a conventional loan?
Neither is universally better; it depends on your credit, down payment, and how long you plan to keep the loan. FHA often wins for lower credit scores and higher debt-to-income ratios, while conventional can be cheaper over time for buyers with strong credit because its mortgage insurance is cancellable. We routinely run both side by side so you can compare the real monthly and long-term cost before deciding.
Can FHA cover a home that needs repairs?
Yes, through the FHA 203(k) renovation loan, which finances the purchase and the repairs in one mortgage. The Limited 203(k) handles cosmetic work up to about $75,000, and the Standard 203(k) covers larger structural projects with a HUD consultant. This is a good option when a home will not pass a standard appraisal in its current condition.
Do you offer FHA construction loans?
Yes. FHA One-Time-Close construction financing, which combines the lot, construction, and permanent loan into a single FHA closing, is covered in detail on its own page. If you are planning to build rather than buy an existing home, call us and we will point you to the right program.
Jesse Gonzalez, President & Founder
NMLS #278103 · CA DRE #01855372 · Last reviewed June 24, 2026
Talk through your FHA options with a real person
Whether you are buying your first home in Sonoma County, refinancing an existing FHA loan, or weighing FHA against conventional, it helps to talk it through with someone who shops lenders for a living. Call Jesse Gonzalez at North Bay Capital at 707-595-5393, or email jesse@northbaycap.com, and we will look at your numbers honestly before you apply.