San Diego 3.5% Down FHA Home Loan - Rates, Limits & Details (2024 Update)

(Please note - these numbers below have been updated for 2023 and are specifically for San Diego however we can do loans throughout California. We do our best to make sure everything is correct at the time you are reading it.)

In this post I break down the ins and outs of the 3.5% down FHA Loan in San Diego.

This mortgage loan is great for anyone that wants to put down as little as 3.5%, get a loan amount up to $977,500 and take advantage of record low historically low interest rates

In this post I cover:

Here's the main points and highlights of the program... 

(Please keep in mind I am approved with 40 +/- wholesale lenders in the state of California and each lender will have different FHA home loan requirements. Things like credit scores, months reserves, DTI's, etc can vary from lender to lender and the below are used for examples.)

  • You do *not* need to be a first time home buyer - you can have never owned before and/or never owned anything ever.

  • This will work for anyone looking to *live* in the home as their primary residence (does not work on second home, vacation home, or investment properties).

  • This works on any livable home, PUD (planned urban development), town home/condo (that is an FHA approved complex), and livable 2 unit, 3 unit, and 4 unit properties. I do not personally deal with land, mobile, or manufactured homes.

  • The minimum down payment needed is just 3.5% of the purchase price. Just take your purchase price x 0.035 = your needed down payment needed. 

Here's a few down payment needed examples:

  • $300,000 x 0.035 = $10,500

  • $400,000 x 0.035 = $14,000

  • $500,000 x 0.035 = $17,500

  • $600,000 x 0.035 = $21,000

  • $700,000 x 0.035 = $24,500

  • $800,000 x 0.035 = $28,000

  • $900,000 x 0.035 = $31,500

  • $1 Million x 0.035 = $35,000

The maximum loan amount in San Diego are as follows:

→ Max loan amount for a 1 unit is $977,500

→ Max loan amount for a 2 unit is $1,251,400

→ Max loan amount for  3 unit is $1,512,650

→ Max loan amount for a 4 unit is $1,879,850

  • The maximum debt to income ratio allowed is 46.99%/56.99% - that means up to 46.99% of your debt can be towards a total housing payment and up to 56.99% of your debt can go towards your total housing payment plus debts.

  • This loan works for for anyone that has a full time job or business for at least 2 years or longer (It's not just limited to first time home buyers, those with limited income, or those with less than perfect credit.)

  • The down payment and closing cost monies can 100% come as a gift from parents or another relative, an employer, an approved charity group, or a government home buyer program.

  • Being approved with over 40 different wholesale lenders I have a variety of FHA lenders that require different credit score minimums. But, I have lenders that will go down to a 550 minimum credit score.

The waiting periods for the FHA loan are as follows:

  • 2 years from Chapter 7 discharge date

  • 3 years if you have a foreclosure

  • 3 years if you have a short sale

Let's dive into some typical questions and answers... 

(Please keep in mind your personal situation might be different and these are used as examples only).

→ Question 1: Can I use the FHA loan in conjunction with your down payment assistance program?

Yes, 100% - that's how it is done. There's a small loan for your 3.5% down payment, you have a 96.5% FHA loan, and together that = 100% financing. You can learn more about the DPA program here

→ Question 2: If I have had an FHA loan before - can I get one again?

Yes, of course. You can have 1 at a time (usually) but you can buy and sell using an FHA loan as much as you want.

→ Question 3: Why would I go with an FHA loan over a conventional loan?

Generally speaking the FHA loan allows for a higher DTI ratio, lower credit score, lower down payment needed above the conforming limits, and overall easier to get as a buyer.

→ Question 4: Okay, you have mentioned the positives - what are some negatives?

I would say some of the negatives versus a conventional loan are: the UFMIP, having it mandatory to buy an FHA approved condo/town home complex, and owner occupied homes only.

→ Question 5: If I have just enough for the down payment - is there a way I can get my closing costs covered?

Yes, we can ask the seller to pay for them in our offer, we can use a lender rebate (video covers), or we can use a combination of the both to limit cash out of pocket.

Here's 5 secrets of this loan (or misconceptions) you might not be aware of... 

(Please keep in mind your personal situation might be different and these are used as examples only).

 Secret #1: Down payments needed aren't 20%

The minimum down payment needed for an fha loan up to a $977,500 loan amount is 3.5%.

 Secret #2: Even if you have had a short sale, foreclosure, bankrupcty, etc in the past you can use again. 

If you have had a short sale you will need to wait just 3 years, 2 years from discharge date on a chapter 7, and 3 years on a foreclosure. 

 Secret #3: You (might not) need cash out of your own pocket for closing costs

If you are buying using an fha loan we can always ask the seller to pay some/all of your closing costs and/or we can use a lender rebate to cover some/all. 

If you are refinancing we can roll them into the loan amount and/or use a lender rebate. 

Both options limit your cash out of pocket. 

 Secret #4: These loans look bad when presented to a seller. 

Not (necessarily) true. If you have a full lender approval (versus just a generic pre-approval), use a buyers agent/lender that presents a great offer package, are buying a townhome/condo in an FHA approved complex, etc - there shouldn't be much difference between an FHA or conventional offer. There's *much more* to an offer than just what type of loan and down payment.

 Secret #5: These loans can be closed in 21 days or less

Gone are the days where an fha loan can take up to 45 days. All of the lenders I use can close a loan in 30, 25, 21, and even 15 days or less. This is vital in todays market when over 30% of all San Diego transactions are by cash, and a huge percent are done by buyers with 20% or more they are putting down. 

Here's the (potential) cash out of pocket you can expect...

(Please note this can vary from borrower to borrower so this is just some helpful guidelines: Your own deposit, home inspections, and home appraisal may vary).

→ Deposit - You should count on putting between 1% to 3% of your sales price - as your deposit into escrow - within 3 days of your offer being accepted. This is totally negotiable between the buyer (you) and the seller. I have helped clients with as little as $500 into escrow. But, keep in mind with the low inventory in San Diego, and lots of offers on each property, that's not a likely scenario. 

→ Home Inspection - You *should* use a licensed home inspector to check out the property to understand the kind of shape it's in. Do you HAVE to? No, just highly recommended. Depending on if it's a home or townhome/condo it will be somewhere around $250-$750 +/-. 

Keep in mind - you can choose to inspection anything you want. The roof, septic, plumbing, electrical, pool, spa, foundation, etc. There are no limits to what you can inspect.  

→ Home Appraisal - You will need to get a home appraisal on the property since you are getting financing. You pay this directly to the appraiser. This has nothing to do with the buyers agent (me), the listing agent, the seller, the lender, etc. This will be around $600 +/-. 

→ Down Payment - Within a few days of closing escrow you will be wiring in the rest of your needed down payment. Your down payment consists of whatever deposit was already wired into escrow + what's needed to close for rest of down payment, closing costs, and escrow impounds. 

→ My offer to you: If you use my services for the real estate and loan I will refund back after the close of escrow (aka after checks are sent out) whatever you spent on your home inspection and appraisal as my way of saying "thank you" for utilizing my services. 

Basic documentation needed from you (or you and co borrower) to begin... 

(Please keep in mind these are the basic documents we will probably need. Depending on your personal situation we may need more or less and will advise accordingly). 

  • Copy of your drivers license (screen shot is fine)

  • Copy of your social security card (screen shot is fine)

  • Last 30 days paychecks (you should get these from your employer via email and PDF each time you are paid). 

  • Last 2 months bank statements - all pages (You just log into wherever you have a bank acount online and save the last 2 months via PDF.)

  • Last 2 years taxes and W2's - If you do not have them you can get them from the IRS website here

  • Latest statements if you have anything like: 401(k), retirement, stocks, bonds, mutual funds, etc

  • If you are self employed we will need last 2 years taxes and W2's (if applicable) as well as year to date profit and loss sign and dated (you can do this - doesn't need to be a CPA). 

  • We can potentially need more depending on this like: pay or collect child support, have been divorced, have had a short sale or foreclosure, have filed bankrupcty, have rental properties, etc. 

Here's your steps to begin right now... 

  1. Fill out my online application at Scotts Loan If it's just you - then you fill it out just for yourself. If you are married - it's you and your spouse (regardless if they work or not, their income, their credit, etc.) If its you and a co borrower - then you both fill it out.

  2. Once complete I will be alerted, check everything over, send you out a list of needed supporting documents, and clarify anything if needed

  3. Once I get the needed supporting documents from you I will double check th application, your needed supporting documents, pull your credit report (it's currently $38 +/- and I pay for that), and get back to you with best scenarios.

  4. If an fha loan doesn't work for whatever reason we can always look at going with another loan program that's better suited for your needs. 

I would love to help assist you with your fha loan - please feel free to give me a call, text, or use the form below. 

Your FHA Loan Insider,


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