Florida FHA Loan
What is a Florida FHA Loan?
If you dream of being a homeowner but are concerned about your credit, FHA loans may be right for you.
FHA loans are mortgages guaranteed by the Federal Housing Administration. The Federal Housing Administration does not directly lend money to the borrower. It insures the loan. The FHA is governed by the U.S. Department of Housing and Urban Development (HUD). This means that the mortgages are backed by the United States government.
Since FHA loans are guaranteed by the federal government, approved mortgage lenders can offer home financing with less risk. This makes FHA loans more accessible to a wider variety of borrowers. They are one of the best options for first-time homebuyers.
Homebuyers who may find their options limited by the requirements for a Conventional loan, may be able to qualify for an FHA loan.
FHA loans were created in 1934 as a resource to help borrowers with less than perfect credit purchase a home. Since 1934, FHA loans have helped over 40 million people become homeowners.
Florida FHA Loan Benefits
FHA loans are popular with a wide variety of homebuyers. This is because of their many benefits. They help borrowers with less-than-perfect credit or no credit history to qualify for home loans. They also help homebuyers who have experienced foreclosure or bankruptcy to qualify.
These are some of the benefits offered by FHA loans.
- Many Types of Loans for a Wide Variety of Needs: Homebuyers have several options for FHA loans. Streamline Refinance is one of the most popular for people looking to lower the interest rate of an existing FHA loan. Check out all the types of FHA loans offered by New American Funding.
- Low Down Payments: With a low down payment option, more people can purchase a new house. This makes them a valuable option for first-time homebuyers.
- Down Payment Assistance Programs: Florida has its own set of assistance programs that are state specific. These programs are offered to homebuyers to help them with funds for their down payment. The most recent of these is the Hometown Heroes Housing Program for community workers. This program focuses on helping essential community members like healthcare and childcare workers.
- Eligibility for these programs will depend on each program's requirements. Borrowers will need to research these programs and organize with them independently.
- Can use Gift Funds for Down Payment
- No Monthly Minimum Income Requirement: Borrowers will still be expected to prove at least two years of consistent income.
- Assumable Loans: This means that a homebuyer can have an existing mortgage transferred to them. The borrower will assume the terms and rates of the current owner’s mortgage.
- Ability to have a co-signer
- Higher Debt-to-Income Ratio than Conventional Loans: Up to 57% under certain circumstances.
- Seller can Cover some Closing Costs: The amount of money it costs to close on a home varies. Some common closing costs to consider are title service fees, appraisal costs, and insurance fees. The seller can help cover some of these costs. This benefit helps both the homebuyer and the seller.
- Many Types of Properties Insured: They are available for single-family detached homes, 2-4 unit homes, condos, townhomes, and manufactured homes.
Florida FHA Loan Requirements
There are many different types of FHA loans. The requirements vary with each loan and are stricter than Conventional loans. Contact your mortgage lender to find out what qualifications they require for approval.
These are some of the general requirements for FHA loans.
A credit score of 580 or higher: A lender may accept credit scores of 500-579. A credit score lower than 580 will require a larger down payment. Lender approval with a lower credit score will depend on the individual conditions of the borrower.
- The ability to pay a 3.5%-10% down payment: The percentage you will pay depends on your credit score. The borrower’s credit score must be 580 or higher to have a down payment of 3.5%.
- Minimum of two years employment: Must have verifiable, steady, and consistent income. Your lender will require documentation. It can include tax returns, pay stubs, or W-2s. This requirement is the same for borrowers who are employees and those who are self-employed.
- Mortgage insurance: The ability to pay the mortgage insurance premium (MIP) is required. The dollar amount of MIP will depend on the amount of the loan. However, all FHA loans will require borrowers to pay an upfront MIP of 1.75%. This is in addition to monthly mortgage insurance that will last for the life of the loan.
- Higher home inspection standards: Property must pass an FHA specific appraisal.
- Loan must be for a principal residential property: FHA loans cannot be used for rentals, investments properties, or vacation homes. Buyers must live in the home.
- A debt-to-income ratio of less than 57%: A person’s debt-to-income (DTI) ratio is the percentage of their gross monthly income they spend to cover debts. Debts can include student loans, credit cards, and any type of federal debt. To qualify for an FHA loan, you cannot spend more than half of your gross income on debt. There are some exceptions. In general, however, many lenders will want to see your debt-to-income ratio be no greater than 43%.
- At least two established lines of credit
Florida FHA Property Requirements
You can use a Florida FHA loan for a single-family or multi-family home. For single-family homes they include detached houses, condos (that are FHA approved), and townhouses.
A multi-family home can have as many as four units. The borrower must live in one of them. FHA loans can also be used for manufactured houses. This is only if they are located on permanent property.
The house must be the borrower's primary residence and the title must be in their name. FHA loans cannot be used for rental or investment properties.
How Do I Qualify for An FHA Loan?
To qualify for a Florida FHA loan you must meet the requirements listed above. You must have a credit score of at least 500. Your DTI must be less than 57%. You must be able to put down a 3.5%-10% down payment.
There is no minimum income requirement, but you must be able to prove consistent income. You will be asked to provide paperwork like your personal ID and tax returns for approval.
The property must be your primary residence. The loan amount you want must adhere to the FHA loan limits for your Florida county.
Your individual lender will have their own qualification standards and requirements.
How to apply for FHA loan in Florida
Each individual loan is different. To apply for an FHA loan in Florida, contact one of the New American Funding branches in Florida. NAF’s loan officers will be happy to answer any questions and help you through the process of applying for an FHA loan.
You will need to provide your lender with certain information. This usually includes personal identifying information and proof of income. Examples include, W-2s, tax returns, a passport or driver’s license, a valid Social Security card.
Florida FHA Loan Limits
FHA loan limits vary per county. The limit for a single-family house is $498,257 in many counties in Florida. Loan limits are decided based on the average sales value of homes in the area.
The top five counties with the highest loan limits are:
Monroe County: $929,200
Collier County: $730,250
Miami-Dade County: $621,000
Palm Beach County: $621,000
Broward County: $621,000
Florida FHA Down Payment Assistance
The Florida Housing Finance Corporation offers many down payment assistance programs. The most recent of these is the Florida Hometown Heroes Housing Program. The program launched in June 2022. It was created as a resource to help eligible community workers, like firefighters and teachers, purchase a home.
If you qualify, you can receive lower-than-market rates on loans including FHA. They also offer down payment and closing costs assistance.
It is up to the borrower to research Florida’s various programs. Each program will have its own eligibility requirements. The borrower will need to decide which ones are applicable to their individual circumstance. They will need to work with these programs independently of their lender.
FHA Streamline Refinance in Florida
Refinancing your FHA loan can be a great idea if you can use it to get a lower interest rate. FHA Streamline Refinance is designed to let you lower your monthly mortgage payments. It switches your original interest rate to a new one based on current market rates.
Refinancing your FHA loan is simple. It has many benefits including,
- Ability to change an FHA Adjustable-Rate Mortgage to a Fixed-Rate mortgage
- Requiring less documentation
- No appraisal required
- No income documentation
- No employment requirement
- No credit check
Florida FHA Loan FAQs
How does a Florida FHA loan work?
Florida FHA loans work the same way as national FHA loans. They follow guidelines set out by the HUD. The difference in Florida specific FHA loans is the loan limit. Loan limits are based on the home values in each county. They can be different from county to county and state to state.
What is the maximum FHA loan amount in Florida?
The maximum loan amount for FHA loans varies by county. They also change each year. Many counties in Florida have a loan limit of $498,257 for a single-family home. There are several counties that have higher limits due to their higher housing costs. The loan limit goes as high as $1,786,950 for a four-family home.
What is the minimum credit score to purchase a house in Florida?
The minimum credit score for an FHA loan is 580. The minimum credit score to qualify for a Conventional loan is 620. Many lenders will accept 500-579 with a higher down payment, but this depends on the borrower's individual conditions.
What qualifies as a first-time homebuyer in Florida?
Florida uses the IRS guidelines for what defines a first-time buyer.
The IRS has stated that a first-time homebuyer is, “an individual who, with his or her spouse if married, has not owned any other principal residence for three years prior to the date of purchase of the new principal residence.”