FHA loans have a reputation for being for first-time homebuyers, but they are also often the perfect solution for any borrower who doesn’t qualify for conventional financing. It’s a great conventional loan alternative as it’s affordable and flexible – you can’t beat it!
At Fidelity Funding Mortgage Corp, we help thousands of borrowers secure FHA financing. we walk you through every step so you understand the loan, what it entails, and the best way to pay it off.
We like to consider ourselves the experts in FHA loans. We love this government-backed program for its flexibility and affordability. You can become a homeowner in Florida with just 3.5% down, that’s $3,500 for every $100,000 of home you buy.
If you have average credit, you may even be able to use gift funds for the entire down payment, allowing you to own a home even faster. FHA loans usually offer low interest rates and competitive fees, making it a great conventional loan alternative.
Qualifying for FHA loans is often easier than most people realize. Here’s what you need.
FHA loans have some of the lowest credit score requirements out of all loan programs available today. With just a 580 credit score you can get some of the best terms, but they’ll go even as low as a 500 credit score with a larger down payment.
You don’t need a perfect credit history either, you just need to prove you can afford the payments and your other obligations. If you had some credit hiccups in the past, FHA loans have some of the shortest waiting periods to get financing after they occur.
Down payment requirements are also flexible for FHA loans. If you have at least a 580 credit score, you need just 3.5% down. But, if you have a 500 – 579 credit score you’ll need at least 10% down. While the down payment is higher, you won’t find too many other loan programs that will lend to someone with a 500 credit score, so it does provide a good opportunity to own a home here in Florida.
FHA loans focus on your debt-to-income (DTI) ratio, too. This is a comparison of your income to your monthly debts. The more debts you have the higher your DTI is and the harder it is to afford your mortgage payment. The FHA breaks down your debt ratio into two ratios: 1) a housing ratio and 2) total debt ratio.
The housing ratio compares just the housing payment to your gross monthly income. By housing payment, they include the principle + interest + monthly property taxes + monthly homeowners insurance + monthly HOA Dues. Ideally, your housing ratio should be 38% of your monthly income or less to qualify.
Your total debt ratio is the total of all monthly debts, including:
This total compared to your monthly gross income is your total debt ratio. Ideally, your total debt ratio shouldn’t exceed 57%, which is much more flexible than the typical 48 - 49% limits often seen with Conventional financing.
FHA loans typically have mortgage insurance ‘for life', which sometimes turns people off, but there are a few reasons to consider it.
Mortgage insurance is the reason FHA loans have flexible guidelines. The mortgage insurance protects the lender should you default on the mortgage payments. This is why we can lend to borrowers with lower credit scores without issue.
Like most government-backed loans, many people have misconceptions about FHA appraisals. Honestly, a FHA appraisal is not really any harder than a standard appraisal, although it is a little more focused on the condition of the home. The Federal Housing Authority (FHA) wants to ensure that your new home is safe and stable for you and your family, which is all the appraisal requires.
Of course, we need to make sure the home is worth at least as much as you’re agreeing to pay. In this regard, your goals are also our goals: we want you to buy a house that’s a good investment, not one that will cost you more money.
Speaking of defending your investment--Florida is a WDO (wood destroying organism/termite) state, which means that a pest inspection is required for FHA loans. While this might adds a little to your closing costs, it also offers you peace of mind that the home is free of pests. The last thing you want is to buy a home with termite damage as it can add thousands of dollars to the cost of the home, not to mention cause many headaches. A recent clear pest inspection from any Florida-licensed pest control company will suffice.
Anyone who doesn’t qualify for conventional loans is often a good candidate for FHA loans. You don’t need perfect credit or a large down payment. If you’re on the fence about buying a home, an FHA loan can be the way to convince you. With little money out of pocket and significantly less hassle than a conventional home loan, you can become a homeowner and start earning equity in a beautiful Florida home.
If you have a blemished credit history or negative housing events recently, you may also be a good candidate, as FHA loans are forgiving.
If you’re looking for the Florida experts in FHA financing, you’ve found it with Fidelity Funding Mortgage Corp. We have extensive experience in handling FHA loans, helping buyers who never thought they be able to buy a home get financing.
We walk you through every step of the process, make sure you understand what comes next, and always take the time answer all of your questions. We’ll help you explore all your loan options and if FHA loans are the best fit, we’ll help you secure the best financing possible for your home.
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Contact us today to tell us your goals and let's make homeownership here in Florida a reality!