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

The Federal Housing Administration loan program allows folks to purchase homes with less than stellar income and credit profiles. The loan program is for people unable to qualify for conventional loans due to higher debts, lower credit scores, bankruptcy, or past foreclosure issues.

This is an overview of the FHA loan program in Clay County, Florida, and how to prepare your application if you qualify.

What is an FHA loan?

The FHA loan program is a popular home financing alternative to conventional mortgages. The FHA insures mortgages made by FHA-approved lenders.

Due to this insurance, lenders are encouraged to approve loans with down payments of as little as 3.5 %. Relaxed qualification requirements and better terms characterize FHA loans.

They are hugely popular among first-time buyers who may lack the necessary funds for a significant down payment. Any borrower may be eligible for an FHA-backed loan, even those who have experienced bankruptcy or foreclosure.

How Do FHA Loans Work?

Lenders can finance your home purchase up to 96.5% of the adjusted market price if you qualify for an FHA loan.

However, ongoing mortgage insurance premiums will be required throughout the loan's duration (or the first 11 years if you put down at least a 10% down payment); MIP usually costs less than PMI.

The FHA gets this money, and if you fall behind on your payments, your lender will notify the agency, which will subsequently pay down your outstanding loan debt.

Because the FHA assumes the default risk, lenders can relax their lending requirements and provide borrowers with bigger loan amounts and more favorable terms.

What to Know Before Requesting an FHA Loan?

In many respects, FHA mortgages differ from conventional mortgages and even other government-sponsored mortgage schemes.

Knowing some things about the loan program will help you get aspects of your credit and finances ready before applying for these loan programs. Here's a look:

FHA Loan Limits

The agency will guarantee the maximum loan sum within the FHA lending cap. These figures differ by state and county as well as kind of residence—single-family or duplex—and the cost of housing in your area.

The conventional lending restrictions set by Freddie Mac and Fannie Mae have an impact on these loan ceilings, which are computed and revised yearly.

The following are the Clay County FHA loan limits for 2022:

  • Single Family Homes - $432,400
  • Duplexes - $553,550
  • Triplexes - $669,100
  • Four-Plexes - $831,550

FHA Loan Minimum Down Payment

You will need to put down at least 3.5 percent of the home's adjusted value if you don't reside in a region that the government has declared a disaster area. Some lenders even request larger down payments to compensate for credit problems.

You can get funds for a down payment from personal savings, cash on hand, a business account, gifts from blood or married relatives, a retirement plan (401K), seller concessions, employment support programs, tax refunds, insurance claims, litigation, lender credit, and sales of properties and assets.

You can also use down payment assistance programs (DPAs). Of course, the FHA doesn't provide DPAs directly, but you can find them from state or local organizations. These usually have restrictions based on your home size and credit score. However, if you're a hometown hero, you may be eligible for a DPA of up to $35,000.

Before accepting your offer, all down payment funds, including those on hand and in personal, business, and 401(k) accounts, must be maintained in an account for at least 60 days.

That implies that you cannot simply stash the money under the mattress and then take it out to pay the deposit on the day of the contract signing. Gift cards must be accompanied by a Gift Letter and wired to Escrow before closing the deal.

FHA Loans' Mortgage Insurance Premiums

With a few exceptions in the FHA loan manual for deals on tribal territories or Hawaiian homelands, most FHA loans demand up-front and annual mortgage insurance premiums.

The upfront MIP amounts to 1.75 percent of the base loan amount. In contrast, the annual MIP ranges from 0.45% to 1.0% of your base loan amount. The MIP is rolled into your monthly loan obligation. The annual mortgage insurance premium is paid during the loan duration or for the first 11 years if you put down at least a 10% down payment.

FHA Loan Income Limits

FHA loans have no income restrictions. However, lenders will still require proof that you can make your monthly mortgage repayments, so be ready with proof of your income. Some of the income taken into account when evaluating borrowers for FHA loans includes:

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

FHA Loan Employment Requirements

An FHA loan application must contain your social security number, two years of employment record, and verification of legal age.

If you've remained with the same employer for more than two years, the lender may ask for a copy of your most recent pay stub to prove your income.

You must present the latest two-year personal and business tax returns if you are self-employed. Lenders may also require current balance sheets, profit and loss accounts (P & L), and other financial records.

If you've only been doing freelance work for a year and don't have tax records for the two years prior, you must present a vital work and income history from those two years. Additionally, you must be working as a freelancer in the same line of work as your former employment or a profession closely similar to it.

When applying for an FHA loan, you can utilize your degree program in place of job history if you just graduated and have only started your profession. Even if you're still paying your student loan, you might be able to qualify for FHA loans as long as you've got a stable job and income.

FHA Loans' 12-Month Rule Payment Requirement

For a successful FHA loan application, you will need at least 12 consecutive months of timely payments on all debts, including rent and mortgage payments. The month you request the loan should be included in those twelve months.

FHA Credit Score Requirements

Only borrowers with FICO scores of 580+ are treated to the 3.5% down payment rule. However, if your FICO score is lower than that, you may still be eligible for an FHA loan as long as your score is between 500 and 579 and you are willing to make a 10% down payment.

FHA No-Refund Policy on Forwarding Mortgages

FHA purchase loans are only available for the mortgage amount plus authorized loan amount add-ons such as UFMIP and certain closing expenses. That means refunds won't be provided unless you're entitled to one for something paid in advance but later integrated into the loan.

Additionally, asking for more than is necessary for the transaction and pocketing the extra money in cash is illegal. FHA loans are not personal loans.

FHA Loan Closing Costs

Although FHA regulations specify which closing costs can be charged to the borrower, the lenders have carte blanche to determine the specific expenses and sums to charge.

  • The lender's origination fee
  • Fees for deposit verification
  • Fees for the attorney
  • Fees for appraisals and inspections
  • Title examination and insurance fees
  • Document preparation fees
  • Fees for credit reports
  • Taxes, recording fees, and transfer stamp
  • Assessment and certification expenses

FHA Loans - Residence Inspection and Occupancy Requirements

You can use an FHA loan to purchase single-family houses, multi-family homes, condominiums, townhomes, manufactured homes, etc.

That said, the following inspection, appraisal, and occupancy requirements apply:

  • An FHA-authorized appraiser must evaluate the home you're thinking of buying.

  • The home must be a primary residence, not a second home or money-maker.

  • The home must be inspected to see whether it complies with the required minimum property criteria.

  • After closing, the property must be occupied within the first 60 days.

FHA Loan Residency Requirements

Regarding residency, FHA borrowers are not required to be US citizens, but they must be legally present in the country and present documentation to prove it. This means that non-resident and resident aliens can apply for loans. It is a must to provide proof of legal status.

FHA Loan Closing Checklist

The closing checklist details all the fees that must be paid, the paperwork that must be submitted, and the declarations that must be signed before the transfer of title. Here's the breakdown:

  • Verify that everyone involved at the closing stage has an ID.

  • Title Insurance Policy to cover the home from previous liens and claims.

  • Homeowner's Insurance Policy to cover the property against the risk of damage.

  • Closing Funds, you will need to bring the total agreed-upon amount via wire transfer form or cashier's check.

FHA Loan text on wooden plank and model house

What Types of FHA Loans Are Available in Clay County, Florida?

FHA loans come in wide different varieties. The kind of FHA loan you select will impact the house you can use the funds for and what type of house you can purchase. Making sure you obtain the right loan is therefore very crucial. You might wish to think about another kind of government loan if FHA loans aren't suitable for you.

Here's a breakdown of the types of FHA loans:

  • FHA Purchase Loan - Used to buy a primary residence.

  • Home Equity Conversion Mortgage - 62+ year-olds can use this reverse mortgage to transform their home equity into cash while maintaining property ownership.

  • FHA 203(k) Improvement Loan - This loan provides additional funds to help with renovations and repairs.

  • The FHA Energy Efficient Mortgage - offers extra funds to assist you in installing systems that can lower your monthly energy expenses.

  • Section 245(a) Loan - This loan is designed so that as your income increases over time, the initial monthly payments gradually increase, reducing the loan's term.

  • FHA Streamline - This is a streamlined refinance option for people who already have FHA loans. It has fewer appraisal requirements, less employment verification, and fewer asset and income documentation requirements so that FHA loan owners can refinance to lower-rate loans quickly.

  • FHA Cash-Out-Refinance - This refinance option lets you convert your property's value into cash. Most lenders require a FICO score of at least 620 plus complete documentation, including income and asset sharing and employment verification.

FHA Loans - Advantages

  • Lower credit score limits than conventional loans

  • Higher DTIs than conventional loans. You can qualify with a DTI as high as 57% if you have a 620- FICO score.

  • Houses can be purchased with as little as 3.5 percent upfront

  • This lending program is open to anyone, not just first-time buyers.

  • No income limits

  • Even borrowers who have experienced foreclosure or bankruptcy might qualify.

  • Competitive interest rates

FHA Loans - Disadvantages

  • Mortgage insurance is required

  • You may borrow a maximum amount, which varies depending on several factors.

  • The loan is for buying a primary home only.

  • Payments for mortgage insurance are made for the duration of the loan.

  • Regardless of your ownership interest in the property, you must still have to pay mortgage insurance.

Local Information About Clay County, Florida

Clay County is tucked along the St. Johns River southwest of Jacksonville. The county was created from a portion of Duval County. Despite having had a difficult start in 1858, directly after the 1830s Seminole Wars and subsequently the American Civil Conflict, the county quickly recovered and became a popular tourist destination.

Many escaped severe winters in the northeast. The beautiful environment, luxury hotels, and natural springs made many people escape severe winters in the northeast.

Today, it remains one of the best places to live in Florida due to its low cost of living, low unemployment rate, and affordable housing. It has a population of 190,865 people, according to the 2020 census. It's characterized by small communities, each with its own unique character.

Clay County residents are known for their big enthusiasm for outdoor adventure, learning brave tales of how things once were in the local museums, and simply unplugging and relaxing in various local chill spots. The county has a typical home price of $142,300 and a median family income of $59,000.

Top attractions and activities in Clay County, Florida includes:

Chowenwaw Park Treehouse Camping

This 150-acre site, situated at the entrance of Black Creek, used to be a Girl Scout camp but is now county property. It offers a beautiful 360-degree panorama of natural Florida.

Car Racing

Are you an avid rally driver? Check it out and see how good you are behind the wheels. On the car racing course at Keystone Heights Firm, you can speed along paved or forested trails.

Enjoy the sunshine in Spring Park

Take a plunge in Spring Park's spring-fed pool, one of Florida's oldest pools that have been used for therapeutic purposes since 1871.

Enjoy the Florida Waterways

Catch a spectacular twilight at Doctor's Lake or a colorful sunrise at the St. Johns River. Better still, use one available boat ramp to access the 39 sq. miles of water. Several local establishments offer kayak and paddleboard equipment too.

Enjoy Local Cuisine

Clay County has a multicultural population, and that is reflected in its art, entertainment, sports, and cuisine scene. From locally sourced fresh seafood to exotic delicacies, there is no scarcity of distinctive cuisine at local eateries here.

Step into Fresh from Yianni's Kitchen, located in Fleming Island, for some Greek cuisine. If some Caribbean spices are what you're craving, try the Irie Diner located in Orange Park. For some Spanish treats, check out the Palermo Puerto Rican Kitchen in Orange Park.


Is an FHA loan a wise idea? FHA loans are for individuals who can't qualify for conventional loans. They require lower credit scores and downpayment than conventional loans and are available at competitive rates. Many FHA lenders also accept down payment assistance grants or loans to help borrowers afford homes easily.

That said, FHA loans require mortgage insurance, making them more expensive in the long run. However, you could always begin with these types of loans and then pay a refinance fee to switch to a conventional mortgage as soon as you have regained a healthy credit score and have 20% equity in the home.

Contact your real estate agent or local FHA-approved officer for further information about 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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