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FHA Loan in Baker County, Florida: Learn About the Low Down Payment Options

If you cannot qualify for traditional house loans in Florida, you can look into FHA loans. FHA loans enable people with less-than-ideal credit histories and income to buy homes. The loans are intended for borrowers who are not eligible for conventional loans because of their substantial debt loads, poor credit histories, prior bankruptcies, or foreclosure concerns.

Here's a look at the terms of the loans and how to apply in Baker County if you're eligible.

FHA Loans in Baker County, Florida

Over the last five years, home prices in Florida have increased by at least 78%, to a current median price of $378,104. That's just a little less than the national average. The median price in Baker County is $349.7K, an increase of 31% from the previous year.

Aside from housing, the cost of living has increased, making it difficult for most people to meet debt obligations. Due to missed payments, high credit utilization, too many hard inquiries in a short period, and defaulting on accounts, many who once boasted stellar credit profiles have witnessed them get besmirched.

This mixture of factors makes it hard for most people to qualify for conventional loans. Most Floridians are now turning to other mortgage alternatives, down payment assistance programs, and subsidies to afford to pay for their homes. One of these alternative mortgage options is the FHA loan program.

What Is an FHA Loan?

The FHA loan program is a well-liked home financing alternative to traditional mortgages. The FHA insures mortgages issued by FHA-approved lenders.

This insurance encourages lenders to make loans with as little as 3.5 percent down, among other lenient qualification requirements' loans are incredibly well-liked by first-time purchasers who might not have the money for a sizable down payment.

Most borrowers, even those who've gone through bankruptcy or suffered foreclosure, may qualify for these loans.

Pros of FHA Loans

  • Lower FICO score requirements than conventional loans

  • Higher DTIs than conventional loans

  • The down payment requirement might be as little as 3.5%

  • Many types of loans. Even borrowers who are not first-time buyers can qualify for some

  • No income limits

  • Even borrowers who've gone through bankruptcy or foreclosure may be eligible

  • Competitive interest rates

Cons of FHA Loans

  • Require mortgage insurance

  • You can only borrow up to a certain amount, depending on your county and the size of the home you want to buy

How Do FHA Loans Work?

If approved for an FHA purchase loan, lenders will finance up to 96.5 percent of the adjusted price of the home you want to buy. Therefore, only a 3.5 percent down payment will be needed from you.

When applying for an FHA loan, you must provide your credit history, employment history, income, and proof that you can make down payment and closing cost payments.

But the flexibility of FHA-backed loans might work most effectively if

  • You have a credit score in the 500-619 range.

  • Your overall DTI is greater than the typical DTI ratio limit of 50%.

  • You require a loan amount equal to or less than the county's existing FHA lending maximum.

  • You want to put down 3.5 percent on a 2- to 4-unit multi-family property you intend to reside in, and you'll use the rental revenue to qualify.

  • You want to put down 3.5% on a fixer-upper and include the cost of renovations in the loan amount.

  • You are using the help of a co-borrower who won't be residing in the property to qualify for the mortgage.

  • You filed for bankruptcy within the last two years or more.

  • In the last 3+ years, you've experienced a foreclosure.

  • You are ineligible to receive a conventional loan.

Due to the higher risk associated with FHA borrowers, higher interest rates and mortgage insurance may be required.

Do All FHA Borrowers Have to Be First-Time Buyers?

Some borrowers are exempted from the first-time buyer requirement. These include veterans and folks in Federally Designated Targeted Areas.

FHA Loan Credit Score Requirements

Only applicants with credit scores above 580 are subject to the 3.5 percent down payment requirement. If your score is between 500 and 580, you might still qualify, provided you are prepared to put down at least a 10% down payment.

FHA Waiting Periods for Foreclosure and Bankruptcy

After your house goes into foreclosure, you must wait three years before applying for an FHA loan. If you filed for chapter 7 bankruptcy, however, you can apply for an FHA loan within two years of the discharge date.


FHA lenders require a front-end DTI ratio of less than 31% and a back-end DTI ratio of less than 43%. For applicants with FICO scores above 620, you can be approved with a DTI ratio as high as 57%.

What Types of FHA Loans Are Available in Baker County?

There are many types of FHA loans. The type of FHA loan you choose will affect the size and kind of home you can buy. It is essential to make sure you get the right loan.

If you aren't a good candidate for an FHA loan, you might want to consider another type of government loan. Here is a look at the types of loans the FHA insures.

  • Home Equity Conversion Mortgage - The HECM is for elderly homeowners. Those over 62 years old can use this reverse mortgage to turn their equity stake in their home into cash while retaining ownership of the property.

  • 203(k) Home Improvement Loan - The FHA 203(k) loan includes additional funds to assist with repairs and renovations.

  • The FHA Energy Efficient Mortgage - This loan provides additional funding to help you install systems that can reduce your monthly energy costs.

  • Section 245(a) Loan - The initial mortgage repayments on this loan will gradually rise as your income rises over time, shortening the loan's length.

  • FHA Streamline - This is a simplified refinance option for those who currently have FHA loans. It makes refinancing to lower-rate loans easier for FHA loan holders by requiring fewer appraisals, employment verification, and asset and income documents.

  • FHA Cash-Out-Refinance - You can transform the value of your home into cash using this refinance option. Most lenders need a 620 FICO score, detailed documentation, asset and income disclosure, and employment verification.

  • FHA Purchase Loans - This is a traditional mortgage available to all first-time home buyers. It's a mortgage that finances the purchase of a primary residence. You can borrow up to 96.5% of the value of a home and put down the rest as a down payment.

Who Can Apply for the FHA Purchase Loan?

Anyone can apply for this type of loan. The only requirement is that you must be a first-time home buyer looking to acquire a primary residence.

For workers in frontline areas (nurses, doctors, teachers, law enforcement officers, active service duty members, veterans, veterinarians, firefighters, etc.), the loan is available via the Florida Housing First Mortgage Program as a 30-year, fixed-rate mortgage.

Borrowers who meet the requirements for this mortgage program are also eligible for down payment aid under the FL Homeownership Loan Program (HLP) Second Mortgage Program.

What is FL HLP Second Mortgage?

The FL HLP Second Mortgage program offers funds to holders of FL Housing First Mortgage loans. These funds can be used for a deposit on a house, mortgage insurance, closing costs, and other prepaid, as well as reducing principal on the first mortgage.

You can get up to $10,000 DPA in the form of a 0%, non-amortizing, deferred second mortgage. This second mortgage will be due if you sell the property, transfer the deed, move out and rent it, refinance, etc.

Baker County FHA Loan Limits

The FHA loan limit is the max loan size the agency is willing to insure. This amount varies by type of house and location.

Here's the breakdown of the loan limits in Baker County, Florida

  • One unit - $432,400
  • Two units - $553,550
  • Three units - $669,100
  • Four units - $831,550

FHA Loans' Mortgage Insurance Premiums

Most FHA loan deals require upfront and recurring mortgage insurance premiums, except those involving tribal areas or Hawaiian homelands.

The upfront MIP equals 1.75 % of the original loan amount and is charged at purchase closure and integrated into your mortgage balance.

Meanwhile, the annual MIP varies from 0.45%-1% of your base loan amount, based on your loan term and down payment. The expense is charged annually but applied to your monthly mortgage payments after being divided by 12.

The annual MIP is paid for the life of the loan, or the initial 11 years if you make a down payment of at least 10%.


PMI stands for private mortgage insurance and is the insurance required on conventional loans. On the other hand, MIP is required on FHA loans.

PMI depends on the borrower's credit score, while MIP does not. That implies that an FHA loan may result in cheaper monthly payments than a conventional loan.

Once you achieve 20% equity in your home, you can stop paying PMI. However, you can't get rid of MIP unless you put down at least a 10% down payment.

Because you pay two different types of FHA mortgage insurance, your APR may land you in the higher-priced mortgage loan category.

Wooden block with word FHA near modal houses

FHA Down Payment

If your credit score is 580+ and you don't live in a federally-designated disaster, you must deposit at least 3.5% of the home's adjusted value. However, some lenders demand higher down payments from applicants with credit issues.

Personal savings, a business account, cash on hand, a retirement plan (401K), gifts from blood or married relatives, seller concessions, tax refunds, insurance claims, litigation, employment support funds, lender credit, and sales of assets and properties are all possible sources of down payment money.

You can also use down payment assistance programs (DPAs). These are loans or grants you can use to pay closing costs, down payment, mortgage insurance, and other prepaid expenses. one example of DPA is the $10K offered by FL HLP Second Mortgage program. There are various other DPA programs in the county. Talk to an experienced loan officer to help you find one.

All down payment money, including those on hand and in business, personal, and 401(k) accounts, must be kept in a bank account for at least two months before making an offer for a home.

That means you can't just stow the cash away beneath the bed and pull it out the day your offer is accepted. Gift money must be supported by a Gift Letter and transferred to Escrow before closing the deal.

FHA Requirements for Income and Employment

You'll have to provide evidence of two years of solid employment and income. In case of regular job transfers or employment gaps, you must provide explanations and supporting documents. FHA loans do not have income limits. They also don't demand borrowers to undergo homebuyer education.

When assessing applicants for FHA loans, the following types of income can be considered.

  • Earnings from social security
  • Investment earnings
  • W2 salary
  • Earnings from gig work
  • Freelance income
  • Supplemental Security Income
  • Social Security Disability Insurance

For your FHA loan request to be approved, you must have made on-time payments on all bills for a minimum of 12 months. These include mortgage or rent payments. You should count the month you apply for the loan as one of those twelve.

Residency Requirements for FHA Loans

You must present documentation of your legal status. FHA borrowers don't have to be US citizens but should be in the country legally and be able to provide identification to verify this. This implies that both non-resident and resident aliens may submit applications for FHA loans.

You can use an FHA loan to buy townhomes, condominiums, prefabricated homes, and single-family or multi-family homes.

The following appraisal, inspection, and occupancy standards are nevertheless applicable:

  • An FHA-authorized appraiser must appraise the property you're considering purchasing.

  • The home cannot be a rental property or a secondary dwelling.

  • The home must be examined to determine if it meets the established minimum property requirements.

  • The home must be occupied during the first 60 days following purchase.

FHA Loan Closing Costs

Although FHA guidelines outline which closing costs can be passed through to the borrower, the lenders are free to choose the precise fees and amounts to charge.

  • Lender's origination fee
  • Deposit verification Fee
  • Attorney fees
  • Inspections and appraisal fees
  • Title examination fees
  • Title Insurance fees
  • Fees for title insurance
  • Fees for preparing documents
  • Credit report costs
  • Fees for registration, taxes, and transfer stamps
  • Assessment and certification fees

FHA Loan Closing Checklist

The closing checklist lists every price that needs to be paid, every document that needs to be turned in, and every statement that needs to be signed before the title can be transferred. The summary is as follows:

  • Verify the IDs of everyone taking part in the closing process.

  • Obtain a title insurance policy to protect the house from previous liens and claims.

  • You must deliver the agreed-upon closing amount via wire transfer or cashier's check to close the transaction.

  • Homeowner's Insurance Policy to protect the property against the danger of damage.

FHA Loans Application Process

The FHA loan application process can be divided into the following steps:

  • Compare rates from various FHA-approved lenders to find a better offer.

  • Fill out an application for an FHA loan. You'll need some basic information about your income and monthly debt.

  • Allow the lender to check your credit report.

  • Provide a two-year work and income history. Recent pay stubs, W-2s from the previous two years, federal tax returns, as well as employer contact details.

  • Record the source of your down payment. Lenders typically require the latest two months' bank statements and a letter explaining where the down payment and closing cost funds are coming from. Plus, if you have a FICO score below 580 or a high DTI, some lenders will need to see that you have saved some cash in the bank.

  • Any unpaid federal debt obligation should be explained and documented. FHA-approved Lenders utilize the CAIVRS database to verify that borrowers haven't defaulted on federal loans, including student loans.

About Baker County, Florida

Baker County is located in North Central Florida. Despite being adjacent to large cities like Crestview, Niceville, and Wright, the setting is one of a tiny, close-knit community.

Most people here live in their own homes, and families tend to lean conservative. This southern county is a jewel if you're looking for a quiet place to settle with your family.

There are unique attractions and opportunities for family fun and entertainment here, the educational system is first-rate, and many industries and employment sectors continue to experience growth every year.

Some of the top attractions and activities here to enjoy with your kids include:

Ride Hard NWFL

This indoor play center is filled with activities such as bounce houses, pool tables, foosball tables, air hockey tables, mechanical riding bulls, and more. No matter the weather, you and your family can have fun here.

Blackwater River State Park

Stop here for outdoor fun if you love canoeing, swimming, kayaking, fishing, or hiking. This river has the purest sand bottom you'll ever see.

Indian Temple Mound Museum

Dive into 12,000 years of Native American history at this Indian temple. The museum has over a thousand clay, stone, pottery, shell, and bone artifacts. Learn about the past with your family through interactive exhibits on drilling, loom weaving, and fire starting.

Sea Dragon Pirate Cruise

This is a 2-hour voyage on a pirate ship that is close enough to Shell Island. Put on your pirate hats and start hunting for treasure!

Introduce Your Kids to The Finest Cuisine in Town

The Baker community is multicultural, evident from its cuisine culture. What better way to dip yourself in the local culture than trying the various cuisines available? Check into Taco Town for some beef, Hispanic cuisine, and bean nachos or taco salad.

If you are jonesing for something Hawaiian, check out the Pounders Hawaiian Grill. Bamboo Sushi Bar & Hibachi Express offers some fine Japanese, Sushi, and Asian cuisines that will leave you full and delighted. You can also stop at food stands such as Dave's Snowballs for some ice cream and yogurt.


Does getting an FHA loan make sense? FHA loans are good alternatives for people who cannot qualify for traditional home loans. They come with competitive rates and require lower credit scores and down payment requirements.

Plus, down payment assistance programs can be used to pay closing costs, down payment, mortgage insurance, and other prepaid expenses.

Nevertheless, because FHA loan borrowers have higher credit risks, lenders require mortgage insurance and charge higher interest rates, resulting in expensive loans overall.

You could, however, start with these loans and then refinance to a lower-rate conventional mortgage once you've recovered a healthy credit profile and have at least 20% equity in the home.

Speak with your real estate agent or a local FHA-approved loan officer for more information on FHA loans.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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