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

With the asking price for an average American home topping the $400,000 mark, most people have trouble raising a sizeable down payment. Conventional lenders require borrowers to put up to 20% down. You'd need to raise $80,000 in cash to qualify for a mortgage. And that's in a country where a $400 emergency would overwhelm 68% of the households.

Fortunately, the FHA loan program accommodates people who wish to buy a home in Franklin County, Florida. The program provides FHA mortgage loans to low-to-moderate income earners. The traditional mortgage lenders often sideline this group of borrowers.

What is an FHA Mortgage?

An FHA loan is a government-backed mortgage issued by the Federal Housing Administration. The FHA loan program seeks to improve homeownership for people in the low to moderate income brackets. The program targets borrowers who wouldn't qualify for a conventional loan at affordable rates.

The loans are insured by the FHA and are issued through FHA accredited lenders. The government backing enables lenders to offer mortgage loans to risky borrowers at reasonable terms. FHA loans feature low-interest rates, flexible credit requirements, and require a low-down payment.

While anyone can apply for an FHA loan, they're popular with first-time homeowners. Some of the benefits of using an FHA loan to buy a home in Franklin County, Florida, include:

  • You can finance up to 96.5% of your dream home

  • It has some of the lowest credit scores requirements on the market

  • The FHA loan program allows you to accept down payment assistance

  • You can apply for down payment assistance for the Florida Housing Finance Corporation.

FHA Loan Requirements

The FHA offers some of the best mortgage terms, but you must meet all the requirements to enjoy these benefits. Some of the requirements to use an FHA loan to purchase a home in Franklin County include:

  • FHA approval - An FHA-approved appraiser must assess the property you wish to buy.

  • Primary residence - You can only use an FHA loan to purchase your primary residence, not a holiday home or investment property.

  • 60-day occupancy window - You must occupy your new property within 60 days of closing the sale.

  • FHA standard compliance - A property inspector must certify that the property complies with FHA minimum standards.

The FHA uses credit requirements to determine your eligibility for the government-backed program. You must meet all these conditions to buy a home in Franklin County, Florida, with an FHA loan.

FHA Loan Down Payment

FHA loans are popular with first-time homeowners because of lax down payment requirements. You can qualify for an FHA loan by putting as little as 3.5% down when buying a home.

The government agency will finance the remaining 96.5% of the home value without saddling you with expensive fees. With conventional mortgages, anything below 20% triggers PMI, which can balloon your monthly payments by several hundred dollars.

With an FHA loan, your credit score determines the size of the home deposit you need to qualify. With a FICO score of 580 and higher, you can buy a dream home in Franklin County with as little as 3.5% down.

Borrowers in the 500 – 579 range are considered high-risk. Therefore, you'd need to put at least 10% down to qualify for an FHA loan.

Putting 10% down can be a high entry barrier for most people. Fortunately, the FHA loan program allows you to use grants and gifts to raise your home's down payment.

You only need to provide documentation proving that the funds are a gift, not a loan. The state of Florida also provides down payment assistance to qualified FHA borrowers.

FHA Mortgage Insurance

Like all government-backed loans, an FHA carries a mortgage insurance premium (MIP). The insurance safeguards the FHA lender against losses if you default on your loan. The length of your mortgage insurance is pegged on the size of your down payment.

If you put at least 10% down when buying a home, your MIP runs for 11 years. All FHA loans with less than 10% down carry mortgage insurance for life.

Lenders use various factors to calculate mortgage insurance, so the rates vary from one lender to the next. The insurance comprises a 1.75% upfront premium and an annual mortgage insurance premium.

Lenders use multiple factors to calculate the annual MIP, which runs between 0.45% to 1.05% of your mortgage. The factors include loan-to-value ratio, mortgage size, mortgage terms, and the deposit.

FHA Credit Score

Since the FHA loans target low-to-moderate income brackets, they have a flexible credit score requirement. FHA loans can accommodate borrowers with FICO scores in the 500 to 640 range.

However, borrowers with scores below 580 need a higher home deposit to qualify for an FHA loan. That's because lenders classify them as high-risk borrowers.

FHA Loan Limits

The FHA limits the maximum amount of loan they can guarantee. The amount varies between states and counties and determines the size of an FHA loan you can take out. The FHA uses Fannie Mae and Freddie Mac's limits on conventional loans to set the limit.

The agency calculates and updates the loan limits annually. The size of your FHA loan also depends on the type of property you wish to buy. The FHA loan limit for Franklin County, Florida, ranges from $420,680 for a single-family home to $809,150 for a fourplex.

  • Single-family home - $420,680
  • Duplex - $538,650
  • Tri-plex - $651,050
  • Four-plex - $809,150

FHA Interest Rates

As a government-backed home loan program, FHA loans carry affordable interest rates. They carry a government guarantee, allowing FHA lenders to offer them a lower interest rate. The federal guarantee makes FHA loans more affordable than conventional loans.

The interest rate on your FHA rate comes down to your credit score, current interest rates, income, DTI ratio, and deposit.

FHA Debt to Income Ratio

Your current debt burden is a primary consideration when applying for an FHA loan. Lenders use your debt-to-income ratio (DTI) to determine eligibility.

Potential homeowners need a DTI lower than 43% of their gross income to qualify for an FHA loan. According to the FHA, your monthly mortgage repayments may not exceed 31% of your monthly gross income.

Lenders use the DTI to gauge your ability to meet your ability to repay the mortgage on time and in full each month. You may struggle to repay the loan if you carry too much debt.

Banks are keen to avoid such scenarios and refrain from lending to people overburdened by bills. However, some lenders accommodate high DTIs if the borrower has a higher credit score.

FHA Income Requirements

Unlike other government loan programs, the FHA doesn't impose income limits on potential borrowers. However, you need a steady source of income to qualify for an FHA loan.

Lenders will require you to submit your FHA loan application pay stubs, W-2s, tax returns, and bank statements. The documents enable lenders to verify your income history and income.

FHA Home Loan written on sticky notes on Wooden Table

Florida's Down Payment Assistance

Besides pleasant weather all year round, there are additional perks to using an FHA loan to buy a property in the sunshine state.

Florida is keen to improve homeownership levels in the state by offering down payment assistance. The Florida Housing Financial Corporation offers potential homeowners several down payment assistance programs.

You can use the funds from these programs to pay your down payment, offset the closing costs, or pay the mortgage insurance premiums. You can also use the funds to pay down your mortgage principal.

Some of the perks of Florida's second mortgage program include:

  • It's open to all FHA-qualified borrowers

  • It applies to all FHA-accredited properties in Franklin County

  • Homeowners with conventional loans can secure up to $7,500

  • Borrowers with USDA-RD and FHA loans can access up to $10,000

  • FL Assist is a non-amortizing, deferred home loan with a 0% interest rate

It's essential to note that the FL Assist is not a grant. It's a zero interest, deferred mortgage and, therefore, not forgivable.

The second mortgage is deferred until you list the property for sale, refinance, transfer ownership, or move out of the property. In that case, the FL Assist becomes due in full. You can't combine the Florida Assist with another state's down payment assistance program.

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

Eligible borrowers may apply for the second mortgage program at the Florida Housing Corporation. You may use the second mortgage to increase your down payment or offset the costs associated with closing your mortgage.

The second mortgage program features some perks, including:

  • It's open to all FHA-qualified borrowers

  • Applies to all FHA-accredited properties in Franklin County

  • It's capped at $10,000

  • The repayment term is 15 years

  • It's a fully amortizing loan with a 3% interest rate

Unlike the FL Assist, the second mortgage carries monthly repayments. The unpaid portion of the loan becomes immediately payable if you sell, refinance, transfer, or move out of the home. You can't combine the second mortgage assistance with another down payment assistance program.

First Mortgage Programs

The Florida Housing Department offers a conventional loan program and two first mortgage loan programs. Eligible, first-time property owners in Florida may apply for any of the three first mortgage programs.

Potential participants in these programs must meet all eligibility requirements to get help with down payment assistance.

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

  • FL HF Preferred Conventional Loan program provides 30-year fixed-rate mortgages to eligible borrowers. Borrowers whose income is 80% or below of the AMI may benefit from lower mortgage insurance premiums. Qualified borrowers are pre-qualified for down payment assistance through FL Assist or FL HLP.

Florida's Down Payment Assistance Requirements

Borrowers seeking down payment assistance from Florida's Housing Department must meet all requirements.

First-time buyers

You must be a first-time homeowner to qualify for eligibility. Veterans and people buying property in a federally designated area are exempt from this requirement.

Income limits

Your income level must conform with the income limits for Franklin County.

  • 1 or 2 buyers in a non-targeted area - $70,000
  • 3+ buyers in a non-targeted area - $81,340
  • Targeted area - $84,000

Property pricing limits

Your property's contracted purchase price may not exceed Franklin County's property pricing limits.

  • Non-targeted area - $ 311,980
  • Targeted area - $ 381,308

Credit Requirements

Borrowers need a credit score of at least 640 and conform with all Agency and US Bank requirements.

  • You'll need a FICO score of 640 – 679 to qualify with a 45% DTI ratio

  • You'll need a FICO score higher than 680 to qualify with a 50% DTI ratio

Using Cash Deposits for a Home Down Payment

As part of the bank's due diligence, they'll examine your account transactions 60 days before your mortgage application. They do this to check your creditworthiness and understand your cash flow. You must ensure your account doesn't raise any red flags for the best results.

Any large deposits into your bank account within the mortgage application period may lead to undue delays. If you prefer to save your home deposit under your mattress, it may derail your homeowning dreams. You can't simply show up at the bank and use the cash fund to ask for a loan.

If your home deposit is saved under a mattress, you need to deposit the money into a bank account. Secondly, you should leave the funds untouched in the account for at least 60 to 90 days. Banks thrive use bank accounts and their transactions to determine your creditworthiness.

If you try to obtain a mortgage within 60 days of depositing a large amount of money into your account, it may arouse curiosity. Your lender may suspect the money is from an illegal source or borrowed. They may spur them to deny your application due to fraud or involve the relevant authorities, including the IRS.

Lenders only review account transactions that fall within the 60-day window period of your mortgage application. Leaving the funds untouched for at least 60 days eliminates this risk. You may then use your hard-earned money to pad your home deposit.

Why buy a Franklin County, Florida home with an FHA loan?

The all-around pleasant weather, tax savings, and down payment assistance program are just some of the perks of living in Franklin County. The county is brimming with lots of fun and exciting activities for the entire family.

Apalachicola National Estuarine Research Reserve

The Apalachicola National Estuarine Research Reserve is perched on the Apalachicola River and Bay. It's home to a diverse collection of plants and animals. The reserve covers 246,766 acres in the Florida panhandle.

The reserve features a Nature Center that makes visiting the nature reserve fun for the entire family. Kids will love the three gigantic fish tanks filled with reptiles, shellfish, and fish native to the region.

The Bay Discovery Room features hundreds of preserved marine life, fossils, and skeleton. You can watch a 12-minute documentary film about the area. You can also explore the raised boardwalk and enjoy viewing wild animals from a safe distance.

Mason's Ruby and Sapphire Mine

You don't get a chance to mine for precious gems every day. Manson's Ruby and Sapphire mine let you find buried treasure, making it a top bucket list destination.

The mine is the perfect getaway for the whole family as the entire exercise is tons of fun. Better yet, you get to keep whatever gems stones your dig up. Be sure to bring lunch since you'll likely be here the whole day.

Your kids will love every minute of this adventure, and the staff members are friendly and helpful. It's a great learning opportunity for the little ones about the virtues of hard work, patience, and rewards.

Pepper's Mexican Grill & Cantina

When you need a casual eatery with delicious food for the whole family, you can't go wrong with Pepper's Mexican Grill & Cantina. The restaurant specializes in Mexican cuisine and seafood but also offers vegetarian options.

Enjoy the quality and tasty dishes in a lively atmosphere staffed by courteous and professional wait staff. Best of all, you don't need a reservation to dine in their beautiful, comfortable booths clad in studded leather.

They have a large and spacious sitting space, so you can stroll in and get a table. It's an excellent place for a family night out, birthday parties, or celebrating special occasions.

Chapman Botanical Gardens

The Chapman Botanical Gardens is the ultimate getaway when you need to escape the everyday hustle and bustle. The gardens were named after a famed 19th-century botanist and are an absolute joy to visit.

Whether you crave some peace or wish to relax in a beautiful garden, you're spoiled for choice. The butterfly garden is an absolute treasure trove of native and migratory butterflies. Sit back and relax as you watch the beautiful creatures fly and flutter about you.

The half-mile loop lets you experience every corner of the gardens and their beautiful offerings. A paved walkway and an elevated boardwalk led to a small marsh area with native plants drawn from before the settlers set foot in America.

St George Island

St. George Island boasts one of the gorgeous beaches in the Gulf of Florida. Non-commercialized, this charming beach natural beach is serene and unspoiled. Rent a bike and tour the beautiful island. Stop by the Cape St. George Lighthouse and check out the museum and gift shop.

Play games on the beach, swim in the gulf water, take a guided kayaking trip, or try your hand at fishing. You can also pitch a tent in the St. George Island State Park's family camping ground. There are plenty of fun and exciting activities for the whole family, including biking, hiking, canoeing, and picnic areas.

Secure Your Dream Home in Franklin County, Florida, with an FHA Loan

With pleasant weather, affordable mortgage loans, down payment assistance, and low taxes, Florida is rooting for you to own a home.

Apply for an FHA home loan to buy a home in Franklin County, and realize your homeowning dreams without financial strife. Join the growing ranks of homeowners in the state.

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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