FHA Loans Oregon
Adventurous Oregon has great weather, high-paying jobs in the tech sector, and a rich, quirky culture that appeals to many young families, making FHA loans the best way to join the ranks of happy homeowners in the Beaver State.
While not as expensive as neighboring California, Oregon can still be rather pricey — the average home costs approximately $483,939, which is above the national average purchase price of $412,000. Given that home buyers will typically spend above $40,000 upfront when using conventional loans, many Oregonians find it difficult to afford this marketplace. Thankfully, an Oregon FHA loan has a lower down payment option and will work with those who have lower credit scores, making it perfect for a young family’s needs.
District Lending is one of the most well-respected FHA lenders in Oregon, and we’re ready to help you afford your dream home. Whether you want to purchase in eccentric Portland or would like a quieter home by Klamath Falls, we’ve got you covered!
Oregon FHA Loan
FHA loans are insured by the Federal Housing Administration, which is a subdivision of the Department of Housing and Urban Development (HUD). Because the government insures the loan, lenders are more willing to work with those who have less than perfect credit, a low gross income, or have previously gone through bankruptcy. It's no wonder that approximately 135,000 Oregon homeowners have leveraged FHA loans to afford a single-family home across the state!
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Oregon FHA Mortgage Requirements
Though an Oregon FHA loan makes it possible for a larger group of home buyers to access financing, there are still some Oregon FHA loan requirements. They are less stringent than for conventional loans, but as with other mortgages, the better your money situation, the more likely you are to get a good interest rate, as FHA lenders are allowed to set their own qualifications.
Credit Score
One of the biggest requirements is your credit score, which is identified through a credit check. If you have a 580 or above, you have a lower down payment option. Some lenders will work with those who have a score as low as 500, but you’ll find it harder to access funding. You should work on building your credit up before applying; thankfully, Oregon has a number of consumer education programs, such as those through the Oregon Consumer League.
Down Payments
You still have to offer a down payment, but it is typically much lower, at just 3.5% of the loan amount for those with a score of 580 or above. This brings your initial investment down to about $16,800, far below the average $40,000 down payment of typical homebuyers. Borrowers with a lower credit score will need to provide a down payment of at least 10%, which can be quite difficult for first-time homebuyers.
Personal Finances
It’s critical that you have a good handle on your finances before applying. You will need to provide tax returns and information about all of your other debt, which will be used to calculate your debt-to-income ratio. This tracks how much of your income is going toward debt payments, such as a car payment, student loans, or other credit cards.
With an FHA loan, you can go a bit higher than with a conventional mortgage, depending on the lender and how well you satisfy other requirements. The absolute maximum is a 57% debt-to-income ratio if everything else is excellent, but most lenders still prefer DTIs closer to 40%.
Closing Costs
Closing costs are still an issue for those who use an Oregon FHA loan, and they are comparable to those you’d get with any other mortgage. Expect to pay about 3% to 6% of the loan amount, on top of the down payment. Part of this will go toward the upfront mortgage insurance premium, which protects lenders in case of default. This is a special element of the FHA program because it is a riskier product for the lender.
Real Estate Market
The Oregon real estate market is competitive: the Oregon Housing Needs Analysis estimates that the state needs a whopping 555,000 new homes to meet the needs of home buyers. With such a serious housing crunch, it can be very difficult to outcompete cash buyers and out-of-state investors — but don’t worry. FHA loan limits are calculated every year based on the average sales price in every county, so as long as you can reasonably afford a house, you’ll be able to get the funding you need.
Oregon FHA Loan Limits
Each year, Oregon FHA loan limits are recalculated to better reflect the current housing market, ensuring that more Oregonians can enjoy low down payments and competitive interest rates on their primary residence. The loan limit is calculated by region rather than at the state level to accommodate price fluctuations between big metros and smaller areas.
Credit Score
Oregon’s average credit scores are in the top ten across the country at 729. However, this doesn’t mean that every resident has this great of credit. If you’re on the lower end, work to rehab your credit score by paying off debts, being responsible with opening new lines of credit, and strive to reach above 580.
Quick Pre-Qualification With District Lending
When you’ve worked on your score and are ready to see if you qualify for a home purchase, you can get preapproved in a flash with District Lending’s online pre-qualification. Input your information, and we’ll tell you whether you qualify for our numerous mortgages, including FHA loans.
Down Payment Requirements
With FHA loans, Oregon residents can enjoy low down payments of just 3.5%. However, this can still be quite steep, and many will rely on family or friends for help. There are also a variety of assistance programs available throughout the state. If you choose to get down payment assistance, you will need a gift letter proving that this is not an additional loan.
Payment Assistance Programs in Oregon
Oregon wants to ensure that every borrower can afford a mortgage, which is why there are so many great down payment assistance programs in this state. When you work with us, we’ll identify what types of programs are available for first-time homebuyers, service members, first responders, and teachers; we can also help you find county and city-specific options that you may never even have heard of.
These are some of the best that you’ll find:
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Oregon Housing and Community Services
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HOME Foundation Buyers Assistance Grant
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City of Portland Down Payment Assistance Loan Program
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Clackamas County NCRA Homebuyers Assistance
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Portland Housing Center Down Payment Assistance
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City of Salem First-Time Homebuyer Downpayment Assistance
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Mortgage Insurance
FHA programs have another difference from conventional mortgages. In addition to your mortgage payments and property taxes, you will also have to pay an annual mortgage insurance premium, which is based on your loan-to-value ratio and the overall loan amount. This helps insure the lender in case you end up defaulting on your mortgage, and the property is foreclosed on. You’ll also have to pay that upfront mortgage insurance premium at the time of close.
FHA Loan Limits
Oregon FHA loan limits are updated every year as the market fluctuates. They are based on the conforming loan limits set by the Federal Housing Finance Agency but are smaller. Loan limits are identified by county rather than statewide. In rural areas, like Baker County, they are $498,257, but they can be much higher in more popular regions. Here are the 2024 loan limits for single-family homes in major metropolitan areas:
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Astoria – $529,000
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Bend – $690,000
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Corvallis – $598,000
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Eugene – $498,257
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Hood River – $724,500
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Portland – $679,650
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Salem – $498,257
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How District Lending Can Help
Oregon homebuyers should feel exhilarated by this next step in their life, ready to get the keys to their new home and start exploring all that this beautiful state has to offer. We want you to spend less time worrying about interest rates and more time enjoying Crater Lake National Park and the Portland Japanese Garden, which is why we make it easier than ever to qualify for a mortgage online.
Our team of mortgage experts will walk you through your many options, including FHA loans, conventional loans, VA loans, and jumbo loans, helping you pick the best one for your circumstances. We’ll explain the entire FHA loan process to you, such as loan limits and qualification requirements, as well as direct you to helpful resources. When it’s time for refinancing, don’t worry — we’re here for you then, too!
Check out our invaluable mortgage calculators to identify what you can afford, then head over to get a free quote and start your Oregon home ownership journey today.
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