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

Are you thinking about buying a house in Florida? You might wonder how to get the 20% down payment required in conventional mortgages. However, securing a down payment doesn’t need to be hard since FHA Loans now offer a convenient way of getting cheap financing to buy your dream home.

Moreover, the Federal Housing Department provides down payment assistance for borrowers under the FHA mortgage program.

Discover more about FHA Loans requirements in Hendry County and how to obtain down payment assistance from mortgage assistance.

FHA Home Loans - An Overview

FHA Loans are government-backed mortgage programs administered by the Federal Housing Administration (FHA). Since 1934, the FHA has enabled buyers to own affordable residential homes through its flexible financing terms.

As a result of government backing and insurance, the mortgage is available for all borrowers regardless of having a low credit score, an existing mortgage, or any history of bankruptcy.

Types of FHA Home Loans

There are various options to consider when applying for the government-backed housing program. Therefore, you should carefully evaluate your needs before settling on a specific FHA loan.

Below are different classifications of FHA Home Loans:

Home Purchase Loans

Are you a first-time buyer wishing to own property? A home purchase loan allows you to buy your chosen property if it meets all the requirements.

For instance, some lenders may approve your loan for a four-unit property, while others may only allow up to a two-unit. In addition, credit score and debt-to-income ratio play a significant role in determining your eligibility for the loan.

Loan Refinancing

If you have an existing mortgage but wish to enjoy lower interest rates, you may consider an FHA Loan refinancing.

The less stringent credit requirements mean you can refinance your mortgage even with a lower credit score. Better still, a higher credit score allows you to integrate different debts into the new loan terms.

FHA Streamline Loans

An FHA Streamline Loan allows you to refinance an existing FHA mortgage in addition to unique benefits. For instance, you can refinance your mortgage into a lower payment rate if you have lower equity than the home’s appraised value.

FHA Streamlines also guarantee a reduction in the underwriting paperwork since you already have an existing FHA Loan. Thus, you’ll require little verification of your income, assets, employment, and property appraisal.

Despite the numerous benefits of FHA Streamline loans, you must be current on all loan repayments to qualify for refinancing. For instance, having no incident of late payment in the last 6 months of the repayment period increases your chances of qualifying.

Cash-out Refinancing Loans

Do you have an FHA loan and looking for extra cash to offset essential home renovations? You could draw some cash off your home equity thanks to cash-out refinance loans.

However, cash-out refinance loans have a stringent pre-approval requirement, including employment and asset verification. In addition, you should have substantial home equity to retain at least 15% of equity after the cash-out program.

203 (k) Loans

FHA (k) Loans enable you to buy your dream house and renovate without drawing cash on home equity. Essentially, it gives you an affordable way to fulfill multiple housing requirements using a single loan.

The minimum borrowing limit for the loan is $5,000, and your planned refurbishment should be complete within six months to qualify for the loan.

You can use the loan to accomplish any of the following projects;

  • Replacing old flooring.
  • Replacing the roofing and plumbing systems.
  • Improving accessibility facilities for disabled family members.
  • Modifying your home’s foundation.
  • Updating the home’s aesthetics

FHA Loans - Basic Requirements

Whether you’re a first-time home buyer or seeking to upgrade your current home, an FHA Loan guarantees you lenient credit requirements that help you save substantial costs

Essential requirements to qualify for the loan include;

  • Your dream home should be your primary residence, not an investment property or a secondary home.

  • You must move into your new residence within 60 days of closing the loan contract.

  • An FHA-approved appraiser should inspect the proposed home to ensure it meets the required property standards.

  • The loan amount shouldn’t exceed the total value of the home you’re buying.

Besides the basic requirements, the Federal Housing Department sets additional conditions, including down payment, income requirements, minimum credit score, and mortgage insurance.

Here is an in-depth look at additional FHA requirements.

FHA Down Payment

The down payment is a percentage of the total home value you should pay upfront before obtaining the loan. If you wish to save extra cash for other significant investments, an FHA loan provides a cheaper alternative, thanks to a lower down payment.

Unlike conventional mortgages, FHA home loans require a minimum of 3.5% of the home’s appraised value as a down payment. However, the maximum percentage for the down payment could be 10% if you have a credit score ranging from 500-579. For instance, if you’re buying a property worth $200,000, you’ll put down $7,000 upfront while the financier will provide the remaining $293,000.

The Federal Housing Department regulates the down payment in many ways. First, the FHA requires accurate documentation of the source and nature of the down payment funds if the lender has concerns about the down payment. For instance, if you’re using a gift to pay your down payment, you must provide a dated and validly signed gift letter, affirming the cash is not a personal loan.

Additionally, the FHA accepts numerous cash sources for the down payment. Familiar approved sources of cash include;

  • Money from savings or checking accounts
  • Cash saved at home
  • Private club savings
  • Gift funds
  • 401K account savings
  • Savings bonds

A convenient way to deposit your cash for a down payment is to open a bank account and keep the cash for at least 60 days as you look for your dream property.

Down Payment Assistance Programs (DPAs)

Many financiers offer affordable financial assistance programs to help you offset your down payment and closing costs. Typically, DPAs are grants or low-interest loans mostly available for first-time buyers.

If you have an existing mortgage, you can qualify for a second structured mortgage payable with the first mortgage. You could also opt for a forgiven loan payable over several years. Alternatively, you may be eligible for a grant under the down payment assistance program.

Whether you choose a loan or grant for down payment assistance, be sure to check for the repayment terms with the lender.

FHA Mortgage Insurance

The FHA charges a mortgage insurance premium (MIP) to cushion your lender against unforeseen financial loss if you don’t pay the loan. As a result, you’ll pay mortgage insurance costs for the life of the loan for a down payment not exceeding 10%.

Usually, the FHA administers MIP in two ways. Initially, you’ll pay an upfront cost of 1.75% of the loan amount and an annual MIP of 0.45%-1.05% of the loan amount. The annual MIP cost depends on your loan duration, mortgage amount, and the amount of down payment.

Credit Score

Your credit score reflects your creditworthiness, usually ranging from 300-850. Your credit score determines how much down payment you’ll make for the loan.

A credit score of 580 or more allows you to pay the minimum of 3.5%, while a score ranging from 500-579 means you should pay at least 10% of the home value for the down payment.

Mortgage lenders will evaluate several factors when calculating your credit score, namely;

  • Timely payment of bills.
  • The type of credit you owe lenders.
  • Existing debt on credit cards.
  • How you use your credit.

Debt-to-Income Ratio (DTI)

The DTI represents the percentage of your gross monthly income that offsets monthly debts. Therefore, lenders will divide your gross income with your monthly debt payments to determine your debt-to-income ratio.

Although you’ll need a DTI not exceeding 43% to qualify for an FHA loan, you could still obtain the loan with a higher DTI if you have a higher credit score.

Income Requirements

The Federal Housing Administration doesn’t have a stringent income limit for prospective borrowers. However, lenders may require you to prove you have sufficient monthly income to repay the loan.

Therefore, lenders may require income verification documents, including pay stubs, bank statements, tax returns, and W-2 forms.

FHA loans text on wooden blocks

FHA Loan Limits for Hendry County

There’s a limit on the maximum amount you can borrow under the government-backed lending program. It all depends on the county of your residence and the number of living units available in your proposed property.

As of 2022, the Department of Urban Housing approves a maximum loan limit of up to $970,800 for homes in high-cost areas such as metropolitan counties.

In Hendry County, Florida, the loan limit is $420,680 for a single-unit living home and $538,650 for a Duplex. Similarly, the loan limit for a Triplex is $651,050, while a property with four living units has a maximum borrowing limit of $809,150. However, the minimum amount for an FHA Home Loan is $5,000.

Benefits of FHA Home Loans

The FHA-backed home loans are a favorite choice for most borrowers wishing to buy homes with little down payment. If you’ve been skeptical about FHA loans, here are reasons to consider the loan:

Smaller Down Payment

The most significant benefit of an FHA mortgage is the 3.5% down payment option, that’s relatively smaller than the 20% required for conventional loans.

So, whether you’re buying a new house or simply upgrading your current residence, a down payment isn’t a significant concern if you have a good credit score.

Flexible Lending Requirements

Government-backed home loans provide flexible lending requirements on credit score, income limits, lending history, and debt limits. As a result, you can get the loan despite foreclosure on your previous mortgage.

Moreover, the FHA accepts proof of compensating factors to boost your credit worthiness. As a result, you can submit verified cash reserves, residual income, additional non-taxable income, and increased earning potential to defend your creditworthiness.

Shorter Recovery Time After Foreclosure

FHA Loans have a shorter waiting period for borrowers with unfavorable credit ratings and foreclosure issues to obtain a loan.

If you had a foreclosure, you could still get another FHA mortgage after three years if you meet all FHA Guidelines. The shorter waiting period is a great relief, unlike in conventional mortgages, where you’ll wait for up to seven years.

Refinancing of Closing Costs

FHA mortgages allow you to roll some closing costs into the loan through lender credit. An easier way to refinance your closing costs is to pay a little higher interest in exchange for the lender’s credit to cover your closing costs.

Allows Non-occupant Co-borrowing

The government-backed lending program allows non-occupant co-borrowing for borrowers who can’t meet the minimum income requirement.

For instance, if you have insufficient income to get the loan, your lender may assess the income of an approved co-borrower such as your spouse or child to advance the loan.

Early Payoff Without Penalties

FHA Loans have flexible loan schedules, either 15 or 30 years. However, you can refinance your loan for a shorter payment duration or settle the loan balance with a one-off payment. Regardless of your choice, an early payoff doesn’t attract penalties as applied in conventional mortgages.

Top 5 Recreation Activities for Families and Kids in Hendry County, Florida

Hendry County is a small town in Southern Florida. The county, established in 1923, derived its name from Major Francis Hendry, a prominent pioneer settler who fought during the American Civil Wars.

Besides its rich history, Hendry County is a favorite destination for residents and travelers of all ages. The County features lovely views of the Florida landscape, diverse culture, excellent Hispanic cuisines, and amazing outdoor adventure sites.

Here we explore the top 5 activities for your kids and family vacation.

Family Fun at Alton Kid Jones Park

The iconic park featuring La Belle’s only covered basketball court became operational in 2009. It has open fields for sports like basketball, kickball, and football. Other amenities include a pavilion, kid’s playground, walking trail, and restrooms.

Dining at a Spanish Restaurant

Florida’s connection to the Spanish culture dates back to many centuries before the establishment of the United States. Today, Florida boasts a population of about 5 Million Latino residents, half of who is Hispanic. Hendry County is among three counties with a thriving Hispanic culture in Florida.

The County is home to many Hispanic restaurants: Bodega Ole, Lamoraga, La Isla Flavor Café, Mermaid Blues, and Chichi’s restaurant.

You can visit any Spanish restaurant for mouthwatering cuisines like Paella rice, Gambas al Ajillo, Gazpacho, Patatas Bravas, sliced octopus, and many more.

And what’s more, most Hispanic restaurants in Hendry County offer in-service dining, special delivery, and takeaway services.

Exploring Cultural Heritage at the Local Museums

Hendry County has a rich cultural heritage depicted by three leading museums; Clewiston Museum, La Belle Heritage Museum, and Golisano Children’s Museum of Naples. All museums contain various historical, cultural, scientific, and artistic artifacts for research and public viewing.

The Golisano Museum, for instance, has been a hub of excellent cultural heritage since 2002. Although it originally began as a children’s museum, it currently hosts visitors of all ages. The museum features a maze, a two-story banyan tree, and a water play station for kids.

Trailing Along Lake Okeechobee

Lake Okeechobee has one of the longest trails in Hendry County at more than 100 miles. The scenic trail forms part of the larger Florida National Trail and spans from Pensacola to Miami in Southern Florida.

Here, you’ll have a lovely view of the lake and wildlife at its best. Moreover, the trails are paved, making it easy to stroll or ride in a wheelchair (for disabled visitors).

Skydiving at Spaceland Florida

Do you love adrenaline adventures? A visit to Hendry County is never complete without jumping off an airplane thousands of feet in the sky.

The Skydive Spaceland Florida is a popular skydiving spot located in Clewiston. With some expert training and guidance, you can have a lifetime opportunity to dive from the sky, even if you’re a first-time jumper.

FHA Loans in Hendry County, Florida - Final Thoughts

When looking for a suitable housing package, nothing is more convenient than having a loan with flexible repayment terms. FHA Loans offer the much-required convenience for borrowers, thanks to a government guarantee.

You can now own a home with a small upfront payment, lower credit score, lower DTI, and fixed interest rates. So, an FHA is all you need if you’re searching for lenient borrowing terms in the mortgage market.

Contact an approved FHA Mortgage lender to check if you qualify for the loan.

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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