Become a Homeowner in Florida With an FHA Loan

Buying a property and becoming a homeowner is a very exciting milestone, however, it can be a stressful process because of the many financial factors that go along with it. Oftentimes, potential first time homebuyers are concerned about being able to afford a down payment or being able to meet home loan eligibility requirements. An FHA loan can be a great option for a borrower because of their lower down payment options and less restrictive eligibility requirements. If you are interested in purchasing a home in Jacksonville, Florida, and curious about loans available to first time homebuyers, North Star Mortgage, Inc. can help. Read on to learn more about FHA loans for first time homebuyers in Florida.

FHA Loans: General Information

1186An FHA loan is insured through the federal government under the Federal Housing Commission, which is part of the USDA, (United States Department of Housing and Urban Development). It is classified as a non-conventional loan, and since it is backed by the government, it poses less risk to a lender because they will be compensated in the event that a borrower defaults on the loan. Because lenders are protected if a borrower is unable to make payments, FHA loans, borrowers can still be eligible for a mortgage if they have a less than ideal credit score or can only afford a minimal down payment.

Benefits of an FHA Loan

There are many advantages to obtaining an FHA loan in Florida, especially for a borrower buying a home for the first time. First of all, you can have a down payment as low as 3.5% and moderate credit scores are allowed when obtaining an FHA loan, which makes it simpler to purchase a home for borrowers who have a low credit score. Additionally, if a borrower is unable to come up with the cost of the down payment, it can be paid as a gift by a family member or friend. FHA loans can be used to purchase a variety of different types of homes, including single family homes, condominiums, manufactured homes, or multi-unit properties. You can also use an FHA loan to refinance an existing mortgage. It is important to note that you will be required to pay for mortgage insurance with an FHA loan.

FHA Loan Application Requirements

When applying for an FHA loan, there are certain requirements that must be met. Typical FHA loan requirements include:

  • A down payment of at least 3.5%.
  • A credit score of at least 580 or higher. There is a possibility to still qualify with a lower credit score, however, a higher down payment will be required.
  • You must live in the newly purchased home as your primary residence.
  • You will be required to pay a mortgage insurance premium, (MIP), until 20% of the loan has been paid off.
  • A debt-to-income ratio, (DTI), of 43% is required.

If you are interested in buying your first home in Jacksonville, Florida, and want to know more about FHA loans and your financing options, contact North Star Mortgage Network, Inc. for a consultation.