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

When researching different mortgage options, one commonly referenced loan program is the FHA loan. An FHA loan offers a wide range of benefits that conventional loans typically lack. Among the most attractive aspects of an FHA loan are low down payment and lenient credit requirements.

Herein is a comprehensive guide on everything you need to know about FHA loans if you wish to purchase your dream home in Citrus County, Florida.

What is an FHA Loan?

An FHA loan is a mortgage loan that the Federal Housing Administration (FHA) insures and an FHA-approved lender provides.

The lender originates, underwrites, and provides the loan, while the FHA guarantees it against default. The FHA is an agency of the United States Department of Housing and Urban Development. The FHA does not issue loans.

Since the government backing protects lenders against losses, this allows them to afford borrowers they wouldn't typically lend to more lenient requirements, among other benefits. Historically, the FHA loan program has enabled many lower-income Floridians to access financing to purchase homes that they would otherwise not afford.

The 15 and 30-year FHA loans are popular among first-time homebuyers largely due to the low-down payment requirement that is more attainable. With an FHA loan, the minimum down payment required can be as low as 3.5% of the total home value, depending on your FICO credit score. FHA loans also give homebuyers up to 6 % of the home value towards closing costs.

There are different FHA loans, including purchase, refinance, and cash-out loans, each with specific property requirements and rules on how to spend the funds. As such, it's vital to get the correct type of FHA loan, depending on your housing needs.

Down Payment Requirements for FHA Loan

One of the key benefits and a significant draw of FHA loans are the low-down payment requirements. With a conventional mortgage, you must put down 20% of the home purchase value as a down payment. With an FHA loan, you must put down as low as 3.5% of the home's purchase price, making it easier to purchase your dream home.

FHA has different down payment requirements based on your FICO credit score. If you have a credit score of at least 580, the minimum down payment is 3.5%.

However, if your credit score is between 500 and 579, you must put down 10% of the home's purchase price. You must pay the down payment upfront, and you cannot include it in the cost of the loan.

For instance, if you seek to purchase a home worth $150,000 at the lowest end, you must put down $5,250 and $15,000 at the highest. These numbers are significantly lower than conventional loans, where you would have had to put down $30,000.

The minimum credit score required to secure an FHA loan is 500. If you have little or no credit, the FHA allows an eligible Non-Occupying Co-Borrower to co-sign the mortgage. The Co-Borrower is not required to live in the home with the homebuyer.

Down Payment Sources

The FHA regulates loan down payments in various ways, not just the minimum investment. The FHA has strict rules on the source of money you use for the down payment. You are required to provide documentation on the source of the money. The list of the most common acceptable sources of down payment includes:

  • Cash from checking accounts and savings
  • Investments
  • Savings bonds
  • 401k accounts and IRAs
  • Personal property sale money
  • Gift funds

Funds you have stashed away in your home, also known as mattress money, are highly discouraged when applying for an FHA loan or any mortgage. You cannot use mattress money for down payment or closing costs.

The primary issue with mattress funds is that they lack a paper trail. One of the main reasons mortgages fall through is the lack of asset verification.

Your lender cannot verify where it came from, the period it was saved or if it highlights your long-term saving habits. If you plan on buying a home with an FHA loan and have mattress savings, you should put the money in a checking or savings account. You must let the funds "season" by sitting in the account for up to 60 days to prove it's yours.

Down Payment Assistance Programs

Down payment assistance programs represent an affordable housing opportunity if you are a low to moderate-income individual and a first-time homebuyer finding it difficult to meet the down payment requirements.

If you lack high income coming up with a down payment can be challenging. The FHA allows gifts from the sources below to be used for the down payment:

  • The borrower's relatives

  • The borrower's labor union or employer

  • A close friend with a well-documented and defined interest in the borrower

  • A charitable organization

  • A public entity or government agency with a homeownership assistance program

Local and state governments run many down payment assistance programs, often employing mortgage revenue bond funds. Florida Housing offers the Bond Loan Program that provides down payment and closing costs assistance to eligible income-qualified homebuyers.

This down payment assistance program is only available with Florida Housing's first mortgage loan and is not a stand-alone program. The assistance is in the form of zero interest, a non-amortizing deferred second mortgage with grants of up to $10,000 for FHA loans effective as of June 1, 2021. The loan is not forgivable and is payable when you sell your home or refinance your mortgage.

Income and Purchase Price Limits for Down payment Assistance

As of 2021, the Florida Housing income and purchase price limits for FHA loan down payment assistance for Citrus County are as follows:

  • Non-Target(1-2 person) - $70,000
  • Non-Targeted(3+ persons) - $80,500
  • Targeted - $84,000
  • Non-Targeted Purchase Price Limit - $311,980
  • Targeted Purchase Price Limit - $381,308

Debt-To-Income Ratio Requirement for FHA Loan

Debt-to income (DTI) ratio refers to your monthly debt obligations (credit cards, mortgages, student loans, and other types of credit) divided by your monthly income pre-tax. For instance, if you earn $2,000 each month and $450 goes to various debt payments, your DTI would be 22.5%.

Lenders use this measurement to determine if you can pay off the FHA loan you're applying for. Typically, with FHA loans, the back-end DTI (all monthly debt obligations) and front-end DTI (mortgage payments) you must have is 43% and 31% or less, respectively. The DTI requirements may vary depending on the lender and your credit score.

Property Requirements for FHA Loan

Not every type of property in Citrus County qualifies for an FHA-insured mortgage. The property has to meet the following qualifications to secure an FHA loan:

  • You must use the loan for your principal residence and not investment property. To prove primary residency, at least one borrower must reside in the home within 60 days of closing the FHA loan.

  • You cannot use the property within 90 days of a prior sale. House flipping is not allowed.

  • The property's title must be in your name or that of a living trust at closing.

  • The property has to undergo FHA appraisal, including HUD-approved inspection, to ensure it is adequate, safe, sound, and sanitary.

You can use FHA loans to purchase single-family homes, individual condominium units, and multiplexes. You may also use an FHA loan to buy and renovate a home, such as a fixer-upper home.

FHA Loan Mortgage Insurance

One catch to FHA loans is that you must pay mortgage insurance premiums (MIP). This is regardless of the credit score, loan amount, or down payment.

Mortgage insurance is necessary since lenders are taking more risk courteously of the 3.5% down payment. The FHA utilizes a two-part MIP schedule:

  • Upfront mortgage insurance premium (UFMIP) – You must pay 1.75% of the loan at closing when you get the loan. You can roll this premium into your mortgage.

  • Annual mortgage insurance premium – Depending on the loan amount, amortization terms of the FHA loan (15 years or 30 years), and the initial loan-to-value (LTV) ratio, you must pay between 0.45 to 1.05% of the loan amount. The premium is divided by 12, and you pay monthly.

FHA Loan Documentation

While the qualification requirements for FHA loans are relatively lenient, the application process can be thorough. You must prove all the qualification attributes considered by the FHA through documentation. Lenders need these documents to verify that you are a creditworthy borrower.

The documentation you will need depend on the lender and type of FHA loan. You should be generally prepared to present the following documents:

  • Proof of employment for the past two years (pay stubs, W-2 forms, 1099 forms)

  • Proof of Social Security number

  • Identification documents(photo ID, driver’s license)

  • Proof of residence and permanent address

  • Income tax returns for the past 24 months

  • Bank statements

  • If refinancing; deeds and notes from existing mortgages, homeowner's insurance, property tax bills

Citrus County FHA Income and Loan Limits

FHA loans do not have minimum or maximum income requirements. The FHA sets the loan limit for the mortgages every year.

In 2021, the FHA announced higher loan limits for FHA loans, which is great news if you want to purchase your dream home in Citrus County. The 2022 FHA loan limits for Citrus County include:

  • One Unit (single-family residence) - $420,680
  • Duplex (two units) - $538,650
  • Triplex (three units) - $651,050
  • Fourplex (four units) - $809,150

FHA loan word on a table with pen and magnifier

Applying for an FHA loan in Citrus County, Florida

To obtain an FHA loan, you first look for a lender approved by the HUD to originate FHA loans. Most banks and mortgage firms offer FHA loans. It's advisable to find a lender that specializes or is experienced in FHA loans.

The next step after deciding on a lender is submitting your loan application. Your lender will require your personal, financial, and property details to start your application. Most lenders allow you to apply online or connect you with a loan officer to complete the application via email or phone.

You can start shopping for property in Citrus County within your price range. Your potential lender will assess your income and financial situation, and credit history for risk and provide a loan estimate. The loan estimate is an overview of the loan amount you can afford, estimated interest rate, mortgage payments, and upfront closing costs.

If you decide to move forward, your lender will request proof of the details you provided, at which point you will submit the documents mentioned earlier for pre-approval.

After your FHA loan is pre-approved, your lender will conduct an FHA-approved inspection and appraisal to determine the property's current market value and if it meets HUD's health and safety standards.

The next phase is FHA underwriting and approval. Your loan file will go through underwriting, where the underwriters analyze your application and credit history and verify the supporting documentation to ensure you meet FHA guidelines. The underwriter may request additional information before the loan is officially approved.

You can close if the underwriter is satisfied that you meet the FHA and lender guidelines. You sign the loan documents during closing and pay associated fees and closing costs. You will receive financing at this stage, property ownership will be transferred to your name, and you can move into your new home.

Fun and Exciting Things to Do/Top Attractions in Citrus County, Florida

Any resident of the Citrus Hills Villages will tell you that there are plenty of reasons to live in Citrus County. Based on your personal and family preferences, there are many exciting activities to engage in.

If you can secure an FHA loan to purchase your dream home, below are some of the top things to do and attractions in Citrus County.

Crystal River National Wildlife Refuge

If your kids love the outdoors and nature, you can indulge them at the Crystal River National Wildlife Refuge. The 90-acre wildlife refuge was founded in 1983 to protect habitats for the endangered West Indian Manatee. Crystal River National Wildlife refuge boats 20 islands with various attractions and activities for kids and adults alike.

The refuge preserves the Three Sister Springs, a trio of natural wonders that provide swimming, boating, and diving opportunities. You can enjoy a guided wildlife refuge tour where your kids can learn about the area's flora and fauna. You can also take strolls along the nature trails observing the diverse wildlife, including manatees (which you can feed), birds, and fish.

Homosassa Springs Wildlife State Park

Homosassa Springs Wildlife State Park is a top spot if you seek an up-close experience of Florida's renowned wildlife in Citrus County. Here you can discover Florida's wild side,, including alligators, manatees, red wolves, deer, Florida panthers, whooping cranes, flamingos, bobcats, black bears, and more.

Various species of fresh and saltwater fish congregate at Homosassa springs, including snappers, large jacks, and snooks. The Underwater Observatory allows you to observe the fish and manatees in their natural habitat.

The park also features wildlife trails to enjoy hiking, geo-seeking, picnicking, and bird watching. Other amenities include a visitor center, a theater, interpretive exhibits, and a restaurant.

The Citrus County Fair

The Citrus County Fair is a must-attend annual event that kids and adults alike will enjoy. The event features several exhibits and attractions that mirror the culture and lifestyle of the Citrus County residents. It also highlights different local produce and innovations.

The entire family can enjoy livestock shows, handicrafts, rodeos, farm produce, and more. Also, the Citrus County Fair features live music shows, flea markets, games, and unique rides. If you work up an appetite, you can enjoy the wide variety of food and drink at stalls gracing the event.

Dining at Los Magueyes Crystal River

Citrus County has a high Hispanic population, which gives the county culture, and mouth-watering cuisine. If you work up an appetite to enjoy what Citrus County offers, ensure that you check out Los Magueyes Crystal River. Los Magueyes offers one of the best Mexican dining experiences in Citrus County and Florida.

The restaurant features a diverse and comprehensive menu of authentic Mexican dishes, from tasty Margaritas and sizzling Fajitas to Enchiladas and Quesadillas. Los Magueyes also has a kid's menu that includes burritos, tacos, burgers, and pizza. Other notable restaurants in Citrus County include El Ranchito Mexican Grill and Habaneros Mexican Grill.

Citrus County Museums

Citrus County museums worth checking out include The Coastal Heritage Museum and Old Courthouse Heritage Museum. The Old Courthouse Heritage Museum is a historical attraction in Citrus County, featuring artifacts and exhibits that highlight the pioneer days of the county. You can also view recent collections and learn about the county's contributions to the film industry.

The Coastal Heritage Museum is a local history museum operated by the all-volunteer staff of Crystal River Heritage Council. The museum is situated in the historic Crystal River Old City Hall and is included in the National Register of Historic Places.

This family-friendly museum features numerous artifacts, exhibits, photos, and furniture that showcase the early history of the western side of Citrus County, particularly Crystal River. It's an excellent place for your family to learn about the history of your communities.

Highland Park

Highland Park is a hidden gem in Citrus County that the entire family can enjoy. If you are looking for a tranquil, un-crowded, and chill spot where you can relax and lounge away a Florida afternoon, this is the place.

Situated in Inverness, this half-acre park has a playground where the kids can play freely, a basketball court to enjoy a friendly game, and picnic tables and pavilions to gather around and enjoy some quality time.


Overall, the FHA loan program makes homeownership more accessible if you are a first-time homebuyer. Thousands of low to moderate-income Floridians have taken advantage of FHA loans to access decent housing.

If you seek to purchase your dream home in Citrus County, Florida and have fewer savings for a down payment or less than stellar credit, an FHA loan may be an ideal borrowing option.

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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