FHA Loan Solutions

Homeownership is a dream of many Floridians. However, most people don’t have the perfect circumstances or finances for a conventional loan with 20% down. Fortunately, a Florida FHA (Federal Housing Administration) loan provides a practical solution for many homebuyers and homeowners looking to refinance.

What Is a Florida FHA Loan?

FHA loans are mortgages that the Federal Housing Administration insures for approved lenders and borrowers. This arrangement makes it possible for buyers to purchase homes at great rates with low down payment options and flexible credit score requirements.

In addition to standard mortgages, other FHA loans include:

  • 203 (k) loan: Financing for home rehabilitation projects
  • Cash-out refinance: A loan homeowners can use to refinance an existing mortgage at a higher amount to access cash
  • Streamline refinance: A simplified option for refinancing an existing FHA loan to one with a lower monthly payment

If you’re looking for any of these programs, Associates Home Loan of Florida, Inc., is ready to help you get the right Florida FHA loan.

Mother and children at home

Are FHA Loans Better Than Conventional Loans?

Your circumstances dictate whether an FHA loan is better for you than a conventional mortgage. As the name implies, conventional loans are for folks with “conventional” or ideal circumstances. For that reason, they offer low down payments and flexible terms.

However, you might have substantial income from freelance sources, a less-than-perfect credit rating, or a higher-than-average debt-to-income ratio. In that case, a nonconforming FHA-backed loan is likely more accommodating.

There’s no monthly minimum income requirement for a Florida FHA loan. You also have additional flexibility with down payments. For instance, you can use gift funds from friends for family. If you qualify, you can also get assistance for a down payment through various sponsored programs.

One caveat is that you can’t use FHA loans for investment properties or vacation homes. Still, they are a great option for a primary residence.

What Are the FHA Lending Limits?

The FHA updates its lending limits annually, and they vary by locality and home type. The most up-to-date list is on the Department of Housing and Urban Development (HUD) website.

For 2024, the maximum for a single-family home in 38 metropolitan statistical areas of Florida is $498,257. The micropolitan statistical area of Key West has the highest limit of $929,200. Check the list and talk to an Associates Home Loan agent to verify the current amounts for your location.

Who Qualifies for a Florida FHA Loan?

A common misconception is that FHA loans are only for first-time buyers. Repeat buyers can also utilize these loans.

Even homeowners who underwent bankruptcy or foreclosures may be able to qualify for a Florida FHA loan. Buyers simply must ensure they meet the following requirements.

Property Requirements

The FHA will back loans for single-family homes, manufactured homes, and multifamily homes with up to four units. The property must be a primary residence.

At least one of the borrowers must start dwelling on the property within 60 days of closing. The property must also meet safety, security, and soundness requirements.

Minimum Credit Score

The minimum FICO score for a Florida FHA loan is 580. However, this also depends on the specific lender. For example, it is not uncommon for a company to set its credit minimum at 580.

Down Payment Requirements

The lowest down payment for an FHA loan is 3.5%. To get that, you need a FICO score of at least 580. A rating below that requires 10% down.

Debt-to-Income Ratio

Your debt-to-income (DTI) calculates how much of your net income you spend on debt payments, such as rent, credit cards, and other loans. The maximum DTI the FHA allows is 57%.

As with credit score and down payment requirements, a lender could set stricter standards. A common standard in the lending industry is to cap the DTI at 43%, but some companies permit 50% in special circumstances.

Does an FL FHA Loan Require Mortgage Insurance?

The Florida FHA loan is for borrowers who are typically at a higher risk of defaulting than those who qualify for conventional loans. For that reason, all FHA home loans require paying two mortgage insurance premiums (MIPs).

You must pay one premium at closing, and the other is an annual fee. However, you can finance the upfront MIP into your loan. It amounts to 1.75% of your base loan.

Your annual MIP depends on your loan term, loan amount, and loan-to-value ratio. If you put down at least 10%, you pay this MIP for 11 years.

If you pay less than a 10% down payment, the annual MIP lasts for the life of the loan. Be aware that you may be able to get rid of this insurance earlier if you convert your FHA loan into another mortgage later.

What Documents Do You Need To Apply for an FHA Loan?

To apply for a Florida FHA loan, you’ll need the following paperwork:

  • Two years of pay stubs or W-2 forms if you’re an employee or two years of tax returns if you have self-employed income
  • Proof of your Social Security number
  • A valid government-issued ID
  • A credit report with two established accounts in good standing and no delinquent federal debts or judgments

As with other aspects of your application, our team at Associates Home Loan of Florida, Inc. can help you ensure that you have the right documents for your loan.

What Closing Costs Do You Have To Cover When Buying a Home?

Remember to budget for closing costs and fees when purchasing a home, such as:

  • The lender’s origination and underwriting fees
  • Fees for document preparation, title search, and insurance
  • The cost of appraisal, surveys, and inspections
  • Your first homeowner’s insurance premium

Closing costs are often less than 3% of the total cost, but this still adds up to a few thousand dollars. Talk with your loan officer about the possibility of rolling the expense into your Florida FHA loan.

Where Is the Best Place To Apply for a Florida FHA Loan?

At Associates Home Loan of Florida, Inc., we’re always ready to help first-time homebuyers and current homeowners with FHA purchase and refinancing needs. Contact us today with any questions you may have about the Florida FHA loan or to begin the pre-qualification process!

Tampa FHA Loan Requirements

  • Credit Score – The minimum credit score requirement is 580. Applicants with scores between 500 and 579 may still be able to qualify, but a higher down payment may be needed.
  • Debt-to-Income Requirements – A debt-to-income ratio of 43% or less is typically required although ratios as high as 50% may be approved in special circumstances.

  • Down Payment – 3.5% is the minimum down payment needed. If minimum credit score requirements are not met, the borrower may be asked to provide a larger down payment.

  • Property Requirements – All properties must meet certain safety, security, and soundness (structural integrity) requirements.

With every FHA loan there are two mortgage insurance premiums (MIP) that are due. The FHA will automatically add an up-front premium to your mortgage balance equal to 1.75% of the purchase price. This addition to your total loan amount will not affect your loan-to-value (LTV) ratio. The second premium due is an annual premium that is paid as part of your monthly mortgage payment. This premium is calculated at .70% to 1.05% of your annual mortgage balance. The exact amount will be based on factors including the total loan amount, your LTV ratio, and the length of your mortgage.

The FHA sets maximum loan limits by county which can range from $271,000 up to $636,500 in high-cost areas.

Tampa FHA Loan Limits

County Single-Family Two-Family Three-Family
Hillsborough $275,665 $352,950 $426,625

At Associates Home Loan of Florida, Inc., we are committed to helping first-time homebuyers and current homeowners throughout Florida with all of their FHA purchase and refinancing needs. Contact us today with any questions you may have regarding Tampa FHA loans or to begin the pre-qualification process!

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