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

If you want to buy a single-unit residential or multi-unit property in Dixie County, Florida but do not have enough down payment, an FHA loan could be your ideal financing option. FHA loans are easily accessible from banks, credit unions, and FHA-approved lenders.

We have discussed FHA loans in the sections below, including the loan requirements, application procedures, and benefits. You'll also discover some fun outdoor activities you and your family can enjoy once you are a Dixie County, Florida resident.

What are FHA Loans?

FHA loans are government-sponsored mortgages known for their low-credit score requirements. The Federal Housing Association (FHA) insures these loans for low- to medium-income borrowers.

With a minimum upfront or down payment of 3.5% and a FICO score of 580, FHA loans are among the most affordable mortgage products in the market.

Like most loan vehicles, there are several requirements you must meet before you become eligible for an FHA loan. For instance, you must make the required down payment, prove your income source(s), and pay the mortgage insurance premium.

First, it's worth noting that you must have your savings in a bank account, not some cash "under the mattress." If you do not have a working/active bank account, you should consider opening a checking or savings account and actively depositing into the account for at least 60 days.

Similarly, you should know the FHA loan limits for the specific county you want to call home. This will help you align your needs and consider what you want and whether this loan product is the right fit. Dixie County, Florida, for instance, has an FHA loan limit of $420,680 for single-unit homes and $809,150 for four-unit properties.

FHA Loan Qualification Requirements

When applying for an FHA loan, ensure you meet the following qualification requirements.

Credit Score Requirements

A credit score, commonly referred to as a FICO score, is a measure of your creditworthiness, a tool lenders use to check your eligibility for loan products. A high credit score means you are more likely to repay your loans in time or meet the payment obligations.

Some aspects that determine your credit score include your credit history, the amount borrowed, duration of the previous loans, incidents of late payments, if any, etc.

FHA has a minimum credit or FICO score of 500. However, to qualify for the minimum down payment of 3.5%, you must have a credit score of 580 and above.

If your credit score falls below 500 or 580, you can try to improve/boost it first before applying for the FHA loan. You can achieve this by consolidating your debts and reviewing your credit reports to check and correct any errors or false accounts.

Debt-to-Income Ratio Requirement

Debt-to-income (DTI) ratio is a ratio of your expenses to your income. A higher DTI, often above 50%, shows that you are spending more than you earn. This is often undesirable as it means you are living beyond your means.

FHA requires borrowers to have a DTI of 43% and below; however, some lenders may accept borrowers with slightly higher figures, provided they have substantial savings and an excellent credit score.

If your DTI is above 43%, consider paying off some of your debts or increasing your income sources. This often takes a while to achieve, but it's necessary if you are to qualify with most FHA lenders.

FHA Loan Income Requirement

FHA doesn't have a maximum or minimum income requirement that can qualify or prevent you from accessing the loan. However, you must prove your source of income and that you can comfortably make the monthly payments. Some of the essential requirements around income include:

  • Having at least two credit accounts, e.g., a car loan or credit card.

  • Having no tax-related issues, federal debt, or debt associated with previous FHA-insured mortgages.

  • Accounting for the cash or gift funds you intend to use to settle the closing fees. This could include money from friends, family members, charity, government agencies, etc. The gifts must be verified through a formal letter, signed & dated by the donor.

FHA Property Requirements

Besides meeting all the above requirements, you must also ensure that the property you want to buy meets some conditions. The FHA mandates that the property to be financed is a primary residence, or at least the borrower occupies one unit if it's a multi-unit home.

Similarly, at least one of the borrowers must occupy the property before 60 days elapse from the date of closing. Below are the other requirements:

  • The property must pass inspection and FHA appraisal.

  • The property cannot be a house flip, i.e., you cannot buy a home that has changed ownership within 90 days from the previous sale.

  • The property's title must bear your name or the living trust's name during trust settlement.

How to Apply for an FHA Loan in Dixie County, Florida

The FHA loan application process is simple. We have highlighted the key steps below.

Choose an FHA-Approved Lender

As noted earlier, banks, credit unions, and lenders offer FHA loans. Typically, your first step is to compare different lenders before picking one whose terms and conditions match your expectations.

The other factors to look out for when choosing a lender are experience in FHA loan origination, licensing, credit reports, etc.

Have all Your Documents Ready

During the application process, you'll need to submit personal and financial documents such as recent paystubs, W2s, bank statements, and other documents that can serve as proof of income.

You will also be required to give your social security number, photo ID, and other relevant documents.

Get Pre-approved

A lender will pre-approve your loan application after looking at your financial documents, credit score, loan amount requested, proof of income, etc. The process is often a bit thorough compared to pre-qualification, which is a quick way to check if you meet the most basic requirements.

If you get pre-approved, you'll proceed to the loan application process. Some of the information you'll submit is a detailed overview of your income sources, recurring debts, housing expenses, previous and current employers, etc.

Once this is done, you'll be awarded a pre-approval certificate, ready to go house hunting.

House Hunting

Work with an agent familiar with FHA homes when looking for an FHA-approved home. Dixie County has some spectacular neighborhoods with homes whose value falls within the FHA loan limits. Where possible, negotiate for seller concessions to help lower your closing fees.

FHA Property Inspection & Appraisal

After scheduling a home inspection to ensure the property is structurally fit, an FHA-approved appraiser will further determine whether the home meets FHA property requirements.

If yes, the appraiser will assess the home's value and communicate it back to the lender. Otherwise, the seller will need to fix any reported issues, and the transaction will be delayed.

Underwriting, Approval, and Closing

Once the property passes the inspection and appraisal processes, what follows is underwriting. This is a critical step that seeks to prove the credibility of your loan documents/application.

The underwriting process takes at least two weeks, and the loan officer will communicate if any further document(s) or information is required of you.

After passing underwriting, your loan gets the final approval, and you'll be cleared to close. During closing, there is some paperwork to sign and payments to make.

Your agent will communicate with the seller and Title Company to schedule the closing date and venue. Always plan how you settle the closing fees to ensure the process is smooth and fast.

Coins are scattered on the black surface and puzzles with FHA loan written

FHA Loan Mortgage Insurance Premium

The borrower must always pay for mortgage insurance when the down payment is less than 20% of the property purchase price. The mortgage insurance premium (MIP) rates for FHA loans range between 0.45% and 1.05%, depending on the loan duration, amount, and down payment.

Besides the annual rates payable as monthly installments, there's a 1.75% premium paid upfront during closing. More often, borrowers choose to roll this fee into the loan amount. This has the disadvantage of increasing your monthly payments since you'll be borrowing more.

You can remove the insurance premium by refinancing your mortgage into a conventional loan. If you want to remove the MIP feature, you must first build at least 20% equity in your home. Automatic cancellation of this premium occurs when the home equity reaches 78%.

For borrowers who made a 10% down payment or more, the MIP payments will last for 11 years instead of the entire loan term.

Benefits of FHA Loans

When applying for an FHA loan, borrowers find several things helpful and advantageous for their unique situations. Below are some aspects that make FHA loans more attractive than other loan products.

You Can Buy Multi-Unit Homes

Unlike the other government-backed mortgages, such as USDA, that limit you to buying a single-unit property, FHA loans can finance a multi-unit home.

And while you'll be required to reside in one of the units as your primary residence, you can rent the rest and earn rental income from it.

Option to Build, Purchase or Renovate

FHA loans allow you to buy an existing property, build a new home or buy a fixer-upper and renovate it. The best part is that you can negotiate the rates, plus you may be eligible for the lowest down payment option on the loan.

This level of flexibility gives you several avenues to become a homeowner.

Payoff Early With no Penalties

While some conventional mortgage products feature early payoff penalties, FHA loans have none. Whether you want to repay the loan as a lump sum or by refinancing it, you won't be charged a fee or penalty.

This can be pretty helpful for those that want to plan their finances better.

You Can Use Some Down Payment Assistance

If you qualify for the FHA loan in Dixie County, Florida, you may be eligible for down payment assistance. There are grants, low-interest loans, deferred-payment loans, and forgivable loans for first-time homebuyers.

Florida Housing offers eligible borrowers up to $10,000 in down payment assistance on a deferred second mortgage. This is a 0% interest loan that is deferrable until and unless the borrower refinances the loan, moves/relocates, or sells the home.

You should note that FHA loans have many ways to reduce closing costs. Besides taking advantage of seller concessions, you can use gift funds from family, an employer, close friends, or a union to pay a portion of these fees.

Family-Friendly Activities You Can Enjoy in Dixie County, Florida

Every wannabe homeowner wishes to live in a safe and well-connected neighborhood. Dixie County, located in northern Florida, has a lot to offer.

From the fascinating residential hubs and welcoming locals to the adventurous outdoors, this county makes a perfect home for every family-oriented homebuyer.

Below are some outdoor fun activities you can explore in Dixie County, Florida.

Try Out Some Local Cuisine

There are several restaurants and dining spots if you want to dine with your family. The Old Town Café in Old Town is one of the local's favorites where you can grab some freshly prepared foods. This spot is famous for salads, sandwiches, and dinner menu soaps.

You can also try the Las Avina, a Mexican restaurant in Cross City that offers excellent Hispanic delicacies, from tacos and ropa vieja to Mexican cord salads and spiced chicken menus.

If interested, you'll find many more Mexican restaurants in Old Town, Suwannee, and Horseshoe Beach. There's the Suwannee Belle Landing, a popular seafood spot in Old Town for seafood lovers.

All the restaurants we have mentioned are kids-friendly and serve a variety of menus for lunch and dinner, so you can always walk in and enjoy a fun family dine-out.

Get Into the Outdoors

Within Dixie County are several spots where you can visit and enjoy nature at its best. One example is the Lower Suwannee Wildlife Refuge, where a significant portion of its northern region lies in Dixie County.

This wildlife refuge is home to bald eagles, manatees, red-shouldered hawks, otters, kingfishers, coastal birds, saltwater and freshwater fishing, etc.

A few spots, such as the Shired Island Beach, are recommended for wildlife viewing and birding. Similarly, some trails lead past mudflats, coastal hammocks, and onto the open beach.

You can also explore the Dixie Mainland by truck through the bottomland hardwoods, pine Flatwoods, and marsh for up to nine miles of countryside/unpaved trails. If you are a nature enthusiast, this county has a lot to offer, and you'll surely love it here.

Explore the City of Hawkinsville

Dixie County has something for you if you love diving and exploring underwater realms. The City of Hawkinsville is a sunken ship located 20 feet deep inside the Suwannee River.

This two-deck, 35-feet wide, and 141 feet long steamboat is a famous underwater marvel that attracts hundreds, if not thousands of advanced divers yearly.

Diverse marine life calls this sunken boat home, from sunfish, black crappies, chubsucker, sturgeon, and Eels, to mention a few. Today, the City of Hawkinsville is one of the twelve underwater preserves found in Florida.

Paddle the Numerous Trails

Dixie County has several paddling trails common among newbies and expert kayakers. The Blueways Trails of tributaries, rivers, and coastlines form part of the 50 miles of the Dixie paddling trail, the Suwannee River wilderness trail, and portions of the Big Bend-Saltwater Paddling Trail.

If you are into canoeing/kayaking, you can rent a boat by the river or bring your own. Certain portions of the trails are also significant for diving, fishing, and snorkeling, allowing you to maximize your experience on the waters.

Camp and Fish Along the Suwannee River

Whether you want to camp in the wild in your RVs, there are several places you can pick. Dixie County is home to several campgrounds, especially along the Suwannee River and the Gulf Coastal towns.

If camping with your entire family, ensure you pack all the necessary gear, especially for outdoor activities, as there will be a lot of hiking, scalloping (if camping near the coastal towns), and even swimming.

Suppose you are particularly interested in fishing, head to the conflux, where the Suwannee River meets the Gulf of Mexico. This spot is famous for freshwater and saltwater fishing. You can take your catch back to the campsite or have it cooked to order in the Salt Creek Restaurant.

Bottom Line

FHA loans are a great financing option for low to moderate income borrowers who want to actualize their dream of owning a home. Whether you want a single-unit, purely residential home, or multi-unit property, Dixie County, Florida, has several options.

You only need to pick a trustworthy agent to help you through the home hunting and loan application. But first, find a reputable FHA-approved lender, get pre-approved, and you are good to go.

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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