An FHA loan is a government-backed mortgage that is insured by the FHA—the Federal Housing Administration. These loans were created in the 1930s when the amount of loan defaulters increased due to the Great Depression.
Today, the FHA loans seeks to help low-to-moderate income families that wish to purchase a property but do not have a high credit score and cannot afford to pay a large lump sum for a down payment. FHA loans also protect lenders from borrowers who default on loans.
For an FHA loan in Florida, you’ll need a tri-merged credit report which has a middle-score of 620. In some cases, middle-scores of 580 can also be accepted but this entirely dependent on your credit history. If you’re applying with a co-borrower who does not have a credit score, you can still qualify for a loan provided that the primary borrower has a credit score of at least 580, 50% of the qualifying income and three active accounts (tradelines) on your credit report.
Borrowers can choose from various types of FHA loans for buying property, home renovation projects, reverse mortgages and refinancing.
Florida FHA Loan Requirements:
- For a smooth loan application, it’s best to have a middle-score of 620 but the minimum credit score requirement for an FHA loan in Florida is 580. In special circumstances credit scores of (500-579) can also be accepted but these borrowers will have to pay a down payment of 10%.
- Borrowers with a credit score of 580 or above will only have to pay a down payment of 3.5% of the value of the property.
- Borrowers need to have a maximum DTI (debt-to-income) ratio of 43%. If some special cases, DTI of 50% will also be accepted.
- Borrowers have to provide documentation that shows the property meets all safety and structural standards of the state.
It needs to be noted that loan limitations are different for each county. There are 67 counties in Florida. The minimum FHA loan amount for Florida is $294,515.
Borrowers with successful applications will have to pay two types of MIPs (mortgage insurance premiums).
- The up-front premium consists of 75% of the total value of the property. This value is added to by the FHA to the total mortgage amount.
- Borrowers have to pay monthly payments. These monthly payments will add up to the total mortgage amount. The monthly amount can be between (0.45%–1.05%) of the annual mortgage balance. The monthly payment amount depends on the length of the mortgage, the total loan amount and the LTV (the loan-to-value ratio).
Benefits of getting an FHA loan in Florida
The FHA loan is most beneficial for first-time home buyers that cannot afford to pay high down payments and may not have a great credit score.
FHA loans can also be taken out for home renovation projects. The FHA 203 loan incorporates their purchase and remodeling costs into a one loan.
e-Finance Mortgage LLC provides financing for current home owners and those who’re looking to purchase property in Florida. We offer initial and refinancing loans so you get the house of your dreams. We provide competitive rates and terms that are in your best interest.
Give us a call today and let’s get started with your application process.