(Mar 25, 2023)
However, not everyone has the same amount of savings available to put towards their down payment. Fortunately, if you're looking to purchase your dream home, but the down payment requirements are putting you off, take a look at FHA loans in Bay County, Florida.
Florida residents interested in buying a home but lack the required cash for the closing costs often turn to FHA loans, which can cover 100% of the purchase price with only a 3.5% down payment plus lenient income and credit requirements.
With their low minimum down payment requirement and other attractive features, FHA loans have become very popular with first-time home buyers.
This article will discuss all the essential details you need to know about FHA loans, including the down payment, loan limits, down payment assistance programs, how to make the cash under your mattress valid, and great things to do in Bay County, Florida. Keep reading to learn more.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Bay County, Florida.
Understand the FHA Loans
An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). These loans are a popular choice for first-time homebuyers because they offer low-down payment options and than conventional loans.
To qualify for an FHA loan, borrowers must have a minimum credit score of 580, a steady employment history, and a down payment of at least 3.5%. They may also be required to pay mortgage insurance premiums that can range from 0.8% to 1.75% of the total cost of the mortgage per year, depending on your credit score and other factors.
Below are more basics of FHA loans to remember before deciding if an FHA mortgage is right for your situation.
The 3.5% Down Payment
The minimum down payment for an FHA loan is 3.5%. The 3.5% down payment is a fixed-rate mortgage that requires only 3.5 percent of the purchase price as an upfront fee. This low down payment makes it an attractive option for first-time homebuyers and those with limited funds for a larger down payment.
Additionally, the down payment can be sourced from family, friends, or other financial assistance programs. If you're looking for an affordable way to buy a house in Bay County, this may be an option worth exploring.
However, you will have to pay mortgage insurance premiums (MIP), which protects the lender if you fail to repay the loan. Mortgage insurance premiums are often required for loans with less than 20% down and are added to your payments; they can range from 0.85% to 1.75%.
The amount depends on your down payment, the time left before your fixed rate mortgage expires, and other factors, such as how the house was constructed and interest rates. Putting a small down payment will raise your MIP, while a sizeable down payment will lower it. So, for example, with 3.5% down, your MIP will be 1.75%, and with 10% down, it will be 0.85%.
FHA Loan Limits in Bay County, Florida
The limitations on how much you can borrow on FHA loans vary depending on your county of residence in the United States. For example, someone living in Bay County is limited to borrowing up to $420,680 for a single-family home, $809,150 for a four-plex, $651,050 for a tri-plex, and $538,650 for a duplex.
However, these FHA loan limits in Bay County are higher than those for conventional loans, meaning you may be able to finance a more expensive home with an FHA loan.
FHA Down Payment Assistance Programs in Bay County, Florida
If you're ready to buy your first home in Bay County, Florida but don't have enough money saved up for the typical down payment on an FHA mortgage, some programs can help you out. These programs are often called down payment assistance or first-time homebuyer programs, and they can make buying your own home possible if you otherwise couldn't afford it.
The following information will give you an overview of the FHA down payment assistance programs available in Bay County to help you decide the one that fits your needs and goals.
Some programs require you to submit a formal application, while others may require you to complete a training course. Most programs determine eligibility based on income and credit history, although state-specific requirements may differ. Lenders provide varying levels of financial assistance. Some offer a percentage of the purchase price, while others use a fixed amount.
The most popular FHA down payment assistance program is the second mortgage program, or FL Assist program from Florida housing, which offers up to $10K for the down payment and other closing costs.
To qualify for this assistance program, you must be a first-time home buyer in Bay County, which means if you own or plan to invest in a second property, you're not eligible. Some of the benefits of using a second mortgage program include but are not limited to:
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0%, non-amortizing, deferred second mortgage
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Since June 1, 2021, you can get the assistance of around $7,500 for conventional loans or up to $10,000 for FHA and USDA-RD loans.
- You'll be granted automatic qualification if you qualified for FHA, USDA-RD, or Fannie Mae HFA Preferred since this assistance program isn't a stand-alone second mortgage loan program.
The second mortgage (FL Assist) assistance program isn't forgivable. Repayment is deferred until you sell the home, refinance it, transfer or satisfy the first mortgage, or vacate the property. In this instance, the Florida Assist Loan will have to be paid in full. The Florida Assist cannot be combined with other down payment assistance programs from Florida Housing.
Government entities, private lenders, and non-profit organizations also offer down payment assistance programs that provide grants and loans you will never have to repay. On the other hand, some assistance programs are available specifically to active members of the military, veterans, surviving spouses, and low-income buyers.
Each aid program has unique requirements, such as a minimum income level, a minimum credit score, and an excellent debt-to-income ratio (DTI).
Can You Use Cash Under the Mattress for FHA Loan Closing Costs?
One of the questions that potential FHA borrowers often ask when they want to refinance their home or take out a new mortgage is whether or not cash under your mattress counts as an asset when qualifying for an FHA loan. The answer is, NO, you can't use the cash under the mattress to cover your loan closing costs obligation. This means any cash on hand outside your bank account that you want to use as part of your down payment and closing costs.
Keep reading to find out why this type of cash isn't acceptable for FHA loans and if there are any alternatives to using this cash for your down payment and closing costs.
Getting a Federal Housing Administration loan requires compliance with the agency's regulations and rules. In the case of using cash under your mattress, you'll run into many problems, including lessening the likelihood of getting approved for an FHA loan. This policy is meant to prevent the FHA loans from being used as a cover for money laundering. So, the agency won't accept cash under the mattress as an eligible payment source.
A problem with mattress money or stashing cash at home is that it doesn't have a paper trail. Lenders can't confirm if it's clean money, whether you genuinely earned it, or how long you have been saving it.
A significant reason your loan application might be denied or delayed is a lack of sufficient proof that you can pay the FHA loan down payment, closing costs, or repay the mortgage with cash from untraceable sources. Therefore, lenders must see proof of your income and savings before approving a loan. This includes pay stubs, assets, and statements of funds saved from traceable sources.
Therefore, to prevent delays when the FHA approves your loan and to keep the paperwork for the down payment and closing costs organized, deposit any funds you plan to use for the purchase into a checking account with the lending institution.
Deposit at least 60 days before your transaction begins. That way, your bank account will have matured funds, and the bank statement reviewed by the FHA won't reflect hefty deposits, which would avoid suspicion with the lender. Some best ways to deposit cash under the mattress include visiting your local bank, using an ATM that takes in cash deposits, or online banking.
Family-friendly Activities to Do in Bay County, Florida
Family time is an integral part of life, and it's essential to make time for your family regularly. There are plenty of fun things to do with your family in Bay County, Florida, no matter the season or where you live in this beautiful county.
You'll find many fun things to do with your family, from delicious restaurants to beaches and attractions where you can have an exciting day and lasting memories. Plan a day out and try one of the below family-friendly activities in Bay County.
Visit the Zoo World
If you're looking for a fun-filled day that the whole family will enjoy, Zoo World is the perfect place. Based in a charming location of Upper Grand Lagoon, Florida, Zoo World is home to exotic animals from all over the world, and you don't need binoculars to view them closely. You can see many animals, from lions and tigers to bears and monkeys.
There are also interactive areas where you can feed the animals; some things to experience are petting a sloth, holding a kangaroo, kissing a giraffe, snuggling a lemur, or even petting a porcupine.
If you have kids in your life (or grandkids) and don't know what to do with them, take them along for a day of fun. There are even shows where your kids can play games and win prizes. Bring your pets along, too—Zoo World has a particular area just for our furry friends.
There are plenty of food and drink options at concession stands throughout the park. Zoo World is open every day except Christmas Day, so it's easy to plan an outing on any given weekend.
Visit the Oaks By The Bay
The Oaks by the Bay is a great way to spend quality time with your family and create lasting memories. The park is located in the old waterfront village of St. Andrews and offers a quiet retreat under the shade of ancient oak trees, including The Sentry, which is believed to be more than 250 years old.
There is something for everyone to enjoy here, whether it's exploring the nature trails, playing on the playground, or picnicking in the park. You can ride around the 1-mile paved trail that winds through the shady sanctuary. Bring your bike, too. You'll never forget spending time at this beautiful park.
2-Hour Dolphin Tours in Panama City Beach
Dolphin Tours in Panama City Beach are a great way to see the dolphins up close and personal. You can also learn a lot about them on these tours. The tour guides are very knowledgeable and can answer any questions. The tours typically last around two hours, which is plenty of time to see the dolphins, take pictures, and make lasting memories with your family.
There are even special tours for children who may not be old enough to be on the boat for a longer duration, which is perfect for families with small children or toddlers. Generally, the dolphin tours start at $275 per group.
Visit the Various Museums
If you and your family are looking for a fun and educational activity, look no further than the many museums Bay County offers. All museums offer many interactive exhibits and programs to keep everyone entertained.
Learn about the local history and culture at the Panama City Museum of History, the Panama City Marina Civic Center, or the Veterans Museum of Northwest Florida.
For a more hands-on experience, check out the Science and Discovery Center of Northwest Florida or the Gulf World Marine Park. And if you want some outdoor adventures, head to the Tyndall Air Force Base, which is open to visitors year-round.
Visit a Restaurant/Cafe for a Hispanic Cuisine
A trip to Bay County wouldn't be complete without experiencing some delicious Hispanic cuisines. The county boasts some of the great restaurants and cafes in The Sunshine State that offer a variety of Hispanic dishes. These foods are worth checking out, from Cuban sandwiches, Puerto Rican Mofongo, Mexican tacos, and burritos.
If you're looking for more traditional favorites like roast pork with rice and beans or black beans with white rice, look no further than one of these local eateries. Try something new and visit one of the following restaurants or cafes in Bay County for Hispanic cuisine:
- Los Antojitos Mexican Restaurant
- El Jalisco Panama City
- Mango Marley's
- Guadalajara Mexican grill
- Cocina Latina - Latin restaurant
- AutentiKa Mexican Grille
- Los Rancheros Mexican Restaurant
- Pepper's Mexican Grill and Cantina
- Diego's Burrito Factory & Margarita Bar
- Back Beach Barbecue
Go Shopping
Shopping is a great way to spend time with your family. You can go to the mall, the grocery store, or even walk around town. Whether looking for the perfect gift or just some new clothes for yourself, spending time with your family at the mall is an excellent way to bond. Plus, it's a great way to teach your kids about budgeting and money management.
Don't worry if you want something at the store but don't have enough cash on hand since most of the shopping areas in Bay County will let you use one of your credit cards instead. Stop by one of the following spots and enjoy a day shopping in Bay County:
- Bay City Point
- Gilberg's Plaza
- Beachwalk Center
- Panama City Square
- Pier Park
- Cato Fashions
- Laguna Beach Gift Shop
- Lynn Haven Shopping Center
- Stanford Station Shopping Center
Bottom Line
FHA loans offer several attractive features to qualified buyers, including low down payment options and flexibility in terms of credit score and income requirements.
If you live in Bay County, Florida, you may be eligible to purchase a home with an FHA loan with just 3.5% down, depending on your situation and the home's price tag. Learn more about these outstanding loans before starting your loan application.
Contact your local Federal Housing Administration office or an approved lender to confirm your eligibility and get more professional directions toward achieving your homeownership dream in Bay County, Florida.
(Mar 25, 2023)
