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

Low income, high debt burden, and sky-high mortgage requirements are the leading barriers to home ownership in the US. Low-to-medium income households are hopelessly priced out in most of the property market. They can't afford to buy a home without a mortgage because the average home costs northward of $400,00 and require a hefty down payment.

Buying a home in Duval County, Florida, may accelerate your homeownership journey. You can apply for an FHA loan and enjoy some of the lowest interest rates on the market, lenient credit score requirements, and a low home down payment.

Best of all, the Florida Department of Housing provides several down payment assistance programs to help you put money down. Borrowers who are eligible for FHA loans can apply for home deposit assistance.

What are FHA Mortgage Loans?

A Federal Housing Administration (FHA) loan is a government-backed home designed to help people in the low-income brackets become homeowners. Under the FHA loan program, the FHA guarantees the loans issued to qualified borrowers by its accredited lenders. The government agency issues the loans to protect the lenders against loss if the borrower defaults on loan repayment.

The government guarantee allows lenders to extend mortgage loans to borrowers who may not qualify for conventional mortgages. FHA loans feature lenient credit requirements, lower credit score limits, and low-down payment options.

FHA loans are attractive to first-time homebuyers due to the flexible terms, but they're available to all qualified borrowers. Some of the perks of using an FHA loan to buy a home in Duval County include:

  • You can borrow as much as 96.5% of the property value

  • FHA loans accommodate borrowers with credit scores as low as 500

  • You can use a financial gift or a grant to pay the down payment

FHA Loan Requirements

You may use an FHA loan to buy a home in Duval County, Florida, but you must meet all FHA loan requirements to qualify for the home loan.

  • An FHA-approved appraiser must appraise the property you wish to purchase.

  • You can only use the FHA loan to buy your primary home, not a secondary residence or investment property.

  • You must move into your new home within 60 days.

  • An inspector must inspect the property and present a report indicating the house complies with FHA's minimum standards.

However, the FHA imposes additional conditions to determine who is eligible for the government loan program. Everyone who wishes to buy a home in Duval County, Florida with an FHA loan must meet these requirements.

FHA Loan Down Payment

Unlike other government-backed home loans, FHA mortgages have a down payment requirement. The FHA uses credit scores to set the down payment borrowers should raise when applying for a mortgage. If your credit score is 580 or higher, you'll need a down payment of at least 3.5%. If your credit score falls in the 500 to 579 range, you'll need to raise a 10% down payment to qualify for an FHA loan.

Fortunately, the FHA loan program allows borrowers to use gift assistance to raise the cash down payment. However, you must adhere to the gift assistance rules to clarify that money is a gift, not a loan.

FHA Mortgage Insurance

All FHA carry a Mortgage Insurance Premium (MIP), which insures the FHA lender against losses should a borrower default on their loan. The length of the mortgage insurance depends on the size of your down payment—borrowers who raise a down payment of at least 10% pay MIP for 11 years. If your deposit is lower than 10%, your FHA loan will carry mortgage insurance for life.

The FHA lenders use several methods to assess FHA loan insurance. First, your lender will apply an upfront mortgage premium equivalent to 1.75% of your loan amount. You'll also pay an annual mortgage insurance premium based on several factors. These include your loan-to-value (LTV) ratio, mortgage terms, total mortgage amount, and the size of your deposit. The annual MIP on an FHA loan runs between 0.45% to 1.05% of your loan amount.

FHA Credit Score

FHA loans are more accommodating to people with low credit scores. You can qualify for an FHA loan with a credit score that's as low as 500. However, your credit score is closely tied to the length of the mortgage insurance on your FHA loan. Borrowers with a FICO score of 580 and above pay mortgage insurance for only 11 years. Potential homeowners with credit scores lower than 580 are considered high-risk and pay mortgage insurance for the life of the mortgage.

FHA Loan Limits

The FHA lending limit is the maximum loan amount the agency will insure. The limits are based on the conventional loan limits set by Freddie Mac and Fannie Mae. There are calculated and updated annually and vary from state to state. The type of home you're purchasing also affects the loan limit. The FHA loan limit for Duval County, Florida, ranges from $432,400 to $831,550.

  • Single-family home - $432,400
  • Duplex - $553,550
  • Tri-plex - $669,100
  • Four-plex - $831,550

FHA Interest Rates

Since the federal government backs FHA loans, they carry competitive interest rates. Typically, FHA loans carry a lower interest rate compared to conventional loans. The federal guarantee enables the lenders to offer these loans at a lower interest rate. The interest rate on your FHA loan depends on your income, credit score, prevailing interest rates, and loan amount. Other crucial factors include your DTI ratio and down payment size.

FHA Debt-to-Income Ratio

Your debt-to-income ratio is a significant consideration when applying for an FHA loan. You may only qualify for an FHA loan if you have a debt-to-income ratio lower than 43% of gross income and the monthly mortgage repayments exceed 31% of your monthly income. DTI is the total amount of money you owe to other creditors, including car loans, student loans, and more. For instance, if you make $6,000 a month and owe $1,500 in student and car loans, your DTI is 25%.

A low DTI is preferable when applying for an FHA loan as it indicates a solid financial position. It shows you're not overburdened by bills and can afford to pay your mortgage monthly. However, you may be eligible for an FHA home loan with a high DTI if you have a high credit score. The requirements vary between FHA lenders, so be sure to shop around.

FHA Income Requirements

The FHA loan program doesn't impose household income limits on prospective borrowers. However, only borrowers with steady employment history are eligible for an FHA loan. You must provide your lender with W-2s, pay stubs, bank statements, and federal tax returns alongside the loan application. Lenders use these documents to verify your income level and employment history.

Holding keys on house shaped keychain in front of a new home

Florida's Down Payment Assistance

One of the perks of buying a home in Duval County is the down payment assistance provided by the Florida Housing Finance Corporation. The Florida assist second mortgage program provides a second mortgage to help qualified borrowers. You can use the funds to pay the home deposit, mortgage insurance premiums, closing costs, and prepaid fees. You may also use the money as a first mortgage principal reduction.

Benefits of the second mortgage program include:

  • It's available to all borrowers who qualify for an FHA loan
  • It applies when buying properties in all counties in Florida
  • Borrowers with conventional loans can get up to $7,500
  • Homeowners with FHA and USDA-RD loans can secure up to $10,000
  • FL Assist is a 0%, non-amortizing, deferred home loan.

Since the FL Assist is a deferred loan, it's not forgivable. Repayment is deferred unless you sell the house, transfer the deed, refinance, or cease to occupy the house. At that time, the Florida Assist becomes payable in full. You may not combine FL Assist with any other down payment program in Florida.

The Florida Homeownership Loan Program (FL, HLP) Second Mortgage Program

Florida Housing Department also offers a second mortgage program to eligible borrowers. You can use the funds for a down payment or offset other mortgage costs.

Perks of the second mortgage program include:

  • All FHA qualified buyers are eligible
  • You can use it when buying properties in all Florida counties
  • You can secure up to $10,000
  • It carries a 15-year repayment term
  • It's a second, fully amortizing mortgage with a 3% interest rate

The FL HLP Second Mortgage features a monthly payment. You may not combine it with any other down payment program. The unpaid loan amount becomes due if you sell, transfer, refinance, or cease to occupy the property.

First Mortgage Programs

The Florida Housing Department offers eligible first-time homeowners two first mortgage loan programs and a conventional loan program. You must meet all eligibility requirements to get the down payment assistance.

  • The Florida First (FL First) (GOVT) program provides eligible borrowers a 30-year, fixed-rate mortgage. Qualified borrowers are automatically eligible for down payment assistance through HLP second mortgage program or FL Assist.

  • The FL HFA Preferred Conventional Loan Program offers qualified borrowers a 30-year, fixed-rate mortgage. Eligible borrowers automatically qualify for down payment assistance FL HLP or FL Assist. Potential homeowners with an income that's 80% or below of the AMI can access lower Mortgage Insurance premiums (MIP).

Down Payment Assistance Requirements

You must meet all requirements to qualify for the down payment assistance programs in Florida, including:

The first-time buyer

Unless you're a veteran or buying a home in a federally designated targeted area, you must be a first-time home buyer.

Income limits

You may not exceed the maximum income limit for Duval County.

  • 1 or 2 buyers in a non-targeted area - $76,061
  • 3+ buyers in a non-targeted area - $87,471
  • Targeted area - $89,760

Purchase price limits

The contracted purchase price may not exceed the price limits for Duval County.

  • Non-targeted area - $340,290
  • Targeted area - $415,910

Credit requirements

Borrowers must meet all Agency and US bank requirements and have a minimum credit score of 640.

  • You may qualify with a DTI ratio of 45% with a credit score of 640 to 679
  • You may qualify with a DTI ratio of 50% with a credit score of 680+

Cash Deposits when Applying for a Loan

Sometimes people prefer to keep their savings at home, where they can keep a sharp eye on them. While saving cash under the mattress might be convenient, the practice is highly frowned upon. While your money may be genuine and legitimate, you may have trouble using it to buy a home.

Undocumented funds pose a significant challenge in real estate transactions. Since lenders scrutinize every transaction in your bank account, any undocumented cash funds will trigger a red flag.

While you can still use the cash under your mattress to pay a home deposit, it may lead to delays. You'll need to open a bank account and deposit the funds. Secondly, you'll need to let the funds sit for at least 60 to 90 days before you can apply for a mortgage.

Attempting to use the funds immediately may make the lender suspect the money is borrowed or from an illegal source. That may cause them to deny your loan application or report the unverified deposits to relevant government authorities.

Leaving the funds to sit in the account for 60 to 90 days eliminates this issue. Your lender will only review deposits that fall in the 60-day window leading up to the loan application. You will not be required to account for deposits made into your account before this period.

Why use an FHA Loan to Buy a Home in Duval County, Florida?

There are many reasons to buy a home in the sunshine state. The weather is always fair, the homes in Duval County are affordable, and you get to lower your tax burden.

You can use the tax savings to repay your FHA loans and build equity in your home quickly. Duval County also features numerous attractions to guarantee the entire family's fun and entertainment.

Catty Shack Ranch Wildlife Sanctuary

Catty Shack Ranch Wildlife sanctuary is an ultimate destination for the whole family. The ranch provides a safe and enabling environment for endangered big cats. A day at the sanctuary lets you get up close and personal with lions, tigers, cougars, bobcats, leopards, and arctic foxes. Enjoy the guided daytime tours to learn about big cats' habitats, personalities, and rescue stories. Pop in on a Friday or a Saturday night for the night feeding events.

Jacksonville Zoo and Gardens

Jacksonville Zoo and Garden is the ultimate getaway for the whole family living in Duval. Perched at the mouth of the Trout River, the zoo sits on 122 acres and is home to more than 2,000 rare and exotic animals and over 1,000 plant species. It's one of the premier attractions in Jacksonville and attracts up to a million visitors each year.

A trip to the zoo is not only fun but also educational. The zoo is home to many animals, including big cats, primates, large mammals, and birds. Besides the wildlife, the park offers a range of fun activities, including unlimited carousel and train rides. The Play Park and Splash Ground only add to the thrill while letting you cool off after a hot day outdoors.

Cummer Museum of Art & Gardens

With a more than 5,000 works collection, the Cummer Museum of Arts & Gardens is a premium destination for art lovers. The museum is home to some of the finest collections dating back to 2,000 BC and well into the 21st century.

Besides marveling at the exquisite works of art, you can tour the museum's garden, which covers over 2.5 acres and houses arbors, reflection ponds, and some of the oldest trees in the city. Check into the learning center and build a wealth of art knowledge. Enjoy free admission on Tuesday and Friday nights and every first and third Saturday of the month.

Cantina Laredo

The Cantina Laredo is an upscale Mexican restaurant that serves mouthwatering dishes. Pick from Mexican, Southwestern, or Latin cuisine and treat your loved ones to various delicious and nutritious meals. You can order takeout and enjoy the tasty offering from home comfort. Or make a reservation and enjoy lavish dining in their indoor or outdoor seating areas.

Stop by for lunch, dinner, and late-night meals; the menu options are pretty dynamic. The eatery offers vegetarian-friendly meals and gluten-free and vegan options. Make every special occasion in your life memorable by celebrating it in the restaurant's beautiful ambiance and setting. The staff is friendly, efficient, and accommodating.

Big and Little Talbot Island State Parks

The Big and Little Talbot Island State Parks are the top destination for nature and outdoor enthusiasts. Between them, these parks cover thousands of acres of salt marshes, coastal forests, and dunes and are home to a diverse range of plants and wildlife. Common wildlife includes marsh rabbits, river otters, bobcats, and native and migrating birds.

Take the family to the 2,500-acre Little Talbot Island Park for tons of outdoor fun. The activities include camping, hiking, fishing, nature watching, swimming, canoeing, and surfing. The nearby Big Talbot Island Park amenities include a full-facility camping ground and beachside picnic pavilions. The two parks feature nature trails, five miles of beaches, and many waterways ideal for kayaking and fishing.

Hands-On Children Museum

You may drag your little ones from the quaint Hand on Children Museum. A trip to this museum is every child's dream come true since everything is miniaturized to suit kids under 10. The tiny building is divided into various sections: a bank, veterinarian, first responders, post office, grocery store, and a boat jungle gym.

There are climbable trains, trains on tracks, a jungle gym with a ball pit, a puppet area, and more. The museum packs enough play areas, sections, and exhibits to occupy their young imaginative minds for hours.

Get Your Dream Home In Duval County

Your homeownership dreams are within reach if you buy a home in Duval County, Florida. You can apply for an FHA loan and enjoy a low down payment rate, affordable loan terms, and interest. Better yet, you can use the down payment assistance program by the Florida Housing Department to raise a sizeable home deposit.

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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