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

Lee County is a great place to live, work, and play. With more than 200,000 residents and over 1 million visitors each year, it's easy to see why this community offers many fun and education opportunities. Whether you want to learn something new or brush up on your skills, Lee County has something for everyone.

This post will give you the lowdown on applying for an FHA loan in Lee County, Florida.

What is an FHA loan?

An FHA loan is a mortgage backed by the federal government. It is an excellent option for first-time home buyers or those looking to buy a home in an area with high property values.

To qualify for an FHA loan, your credit score must be 580 or higher, and you'll need to make a down payment of at least 3.5% of the purchase price (this can include gift funds). If you have less than perfect credit, these loans are also available.

  • Home Equity Conversions Mortgage (HECM) - This reverse mortgage allows you to use your home's equity as a source of cash.

  • 203(k) FHA Improvement Loan - Use this type of loan to make repairs or improvements to your home, such as installing wheelchair ramps and stair lifts, adding a bathroom or bedroom, or improving energy efficiency.

  • FHA Energy Efficiency Mortgage - This loan is designed specifically for those who want to purchase their first home but cannot afford it due to high energy bills. It can also be used by homeowners who live in areas with extreme weather conditions—such as hurricanes and tornadoes—to reduce the amount of money they spend on heating and cooling each year.

  • Graduated Payment Mortgage - When interest rates are low, and rising prices have reduced your income, consider this option—it will help you build equity faster because it offers lower payments when interest rates are low but higher payments when rates rise.

  • Growing-Equity Mortgage (GEM) - This program lets homeowners take out smaller loans against their home's value over time instead of having one big sum all at once as traditional mortgages do.

How does the FHA loan work?

The FHA loan program allows you to buy a home with as little as a 3.5% down payment, and some lenders require even less.

A credit score of 500-579 is still acceptable for the FHA loan, but it's always best to aim for that high credit score if possible.

Loan limits are usually limited by county, so check what your local limit is before you start looking at homes or land that might exceed your borrowing power.

Pre-qualification is often a good idea before shopping around too much because it can give you an idea of how much house you can afford based on your income and debt-to-income ratio (DTI). You may also want to consider getting pre-approved by a lender before shopping around so they can run an official credit report on you and see how qualified you are for an FHA Loan!

If all goes well with these steps, then take the FHA Homebuyer Education Course, which will help prepare you for homeownership!

FHA's low credit score and low deposit

An FHA loan is still the right option if you have a low credit score and a low-down payment. The FHA Loan provides homebuyers with flexible financing options that help them secure a mortgage, even if they can't make the standard 20% down payment on their new home.

FHA loans require only 3.5% of your funds when purchasing a home (which could be saved from gift cards or cash gifts from family). After you've found the perfect house and taken it off the market, all that's left is to sign up for an escrow account where your monthly mortgage payments will go until it's time for closing.

If you're worried about finding money for closing costs, which range between 2-3% of your total loan amount, don't stress - The seller may cover some or all of these fees as part of their original offer price!

FHA Interest and PMI

If you have an FHA loan, your lender must charge an upfront mortgage insurance premium (PMI) of 1.75% of the loan amount. This is upfront and goes towards paying for the insurance on your loan.

The monthly payment for PMI can range from 0.45% to 1%, depending on the size of your down payment and the type of loan you're getting. In most cases, it's 0.60%. A $300,000 home with an FHA mortgage with 20% down would be $1,153 per month in PMI payments along with the principal and interest payments every month until you reach 25 years old (or 30 years old if you make extra payments).

Pre-Qualify for an FHA Loan

To pre-qualify for an FHA loan, you should be able to demonstrate employability, job stability, and reliability. Lenders' income and employment history are essential factors in assessing your ability to repay the mortgage loan.

In addition to income and employment information, credit scores also play a role in determining whether or not you qualify for an FHA loan. If your credit score is below 640, obtaining an FHA-insured home loan may be difficult unless there are extenuating circumstances (e.g., bankruptcy) may be difficult.

However, if your score falls below 679 with other positive factors such as no late payments on loans, your chances of approval increase significantly.

DTI required is 45

If you're looking to buy a home in Lee County, Florida, with an FHA loan, you'll need to ensure your DTI is within the lender's guidelines. The DTI is calculated by taking your monthly mortgage payment plus all of your other recurring monthly debt payments and dividing that by your gross monthly income.

Total monthly expenses cannot exceed 45% for borrowers without a cosigner and 31% for borrowers with a cosigner.

All parties on the deed must be first-time home buyers

You must be a first-time homebuyer to qualify for an FHA loan. This means that you do not currently own a home and have never had one in the past. The requirement extends to your spouse, partner, and any other people who will share property ownership with you. If any of them have previously owned homes or are currently co-owners on another property, your loan application will likely be denied.

Because this rule is so critical to determining whether or not an applicant can get approved for an FHA loan, it's essential to understand exactly what qualifies as owning a home before getting into too much detail about what counts as "first-time" ownership—and what doesn't count at all!

Homebuyer education is mandatory

The housing agency will also require you to take a homebuyer education course, which teaches you how to make intelligent financial decisions as a homeowner. You can take this online or in person at a community college, library, or local job training center.

Property Requirement

The loan can be used for single-family homes, duplexes, triplexes, quadruplexes, and condos. You cannot buy a manufactured home with this loan. Modular housing is permitted under the FHA 203k Program.

You can only use an FHA loan to buy a house in Lee County if the house is your primary residence. It also means that if you have owned a home and sold it, you will have to wait at least one year before purchasing another home with an FHA loan.

FHA Loan Limits in Lee County, Florida

Another critical thing to know is that there are limits on how much you can borrow with an FHA loan that varies by county. These limits are the maximum loan amount, and your county's median home value determines them. As of April 2019, the maximum loan amount in Lee County is $381,308.

This means that if you want to purchase a home for $500,000, you'll have to put down at least $118,692 (20 percent) of your own money toward the purchase price so that when combined with the mortgage loan amount of $381K will not exceed the maximum allowed FHA loan limit for Lee County.

The Federal Housing Administration (FHA) sets the maximum home purchase price. A buyer can pay the highest amount for a home before the FHA limits its exposure to potential loan losses. It establishes how much can be financed with your FHA-insured mortgage loan. The maximum loan amount is based on several factors, including:

  • Your down payment
  • Your credit score (if you have one)
  • Your debt-to-income ratio

Down Payment Requirement

Your down payment can be as low as 3.5% of the purchase price. This can come in handy for first-time buyers looking to buy a home who don't have that much money saved up for a down payment.

The Florida Housing Finance Corporation offers several programs for borrowers who want to buy a home with little or no cash. The Conventional 97 Home Loan Program allows borrowers to qualify for $10,000 towards their down payment, closing costs, and PMI payments.

They also offer an Interest Rate Reduction Refinance Loan (IRRRL), where you can borrow up to $8,000 toward your closing costs, or the credit limit on your current mortgage loan will increase by $150,000 if applicable, which could help make paying off your current mortgage easier.

Having cash under the mattress is a no-no in this industry

A cash down payment is not an option when you apply for a home loan in Lee County, Florida. Instead, you'll need to demonstrate how much money you have and how you plan to pay for the property.

The lender will examine your income and credit history before approving or denying your application.

You will have to deposit that money. Open a bank account, deposit the money, let it sit for 60 days, then find a home.

You can open an account at any bank or credit union. This formality is usually done online through electronic channels such as eSignature services like DocuSign® but sometimes requires visiting an actual branch office location (if possible).

The good news here is that these institutions generally offer free checking accounts with no minimum balance required; however, they should still be used responsibly between now and when/if it's time to buy your next home!

Hand holding white paper house figure on blue background

Down payment assistance programs from Florida Housing

To be eligible for an FHA Loan in Lee County, Florida, you'll need a minimum down payment of 3.5% of the purchase price of your home.

But what if you don't have that much money? Fortunately, several programs can help you get started toward homeownership with a lower down payment. The first is with Florida Housing's Down Payment Assistance Programs:

  • First-time homebuyer program
  • Second-time homebuyer program
  • Distressed area property purchase program

The programs provide up to 10% down payment assistance, closing cost assistance, and credit counseling services.

Benefits of FHA Loans

The Federal Housing Administration (FHA) is a government organization created to help ensure that homeownership remains within reach for millions of Americans.

The FHA loan program has many benefits and features that make it an excellent option for first-time home buyers and those who may have less than perfect credit. Here are some of the top benefits of an FHA loan.

Low Down Payment

One of the most significant advantages of an FHA loan is its low-down payment requirement. A borrower can purchase a home with as little as 3.5 percent down and still qualify for an FHA loan. This means many more people can afford to buy a home than they could through a conventional mortgage with 20 percent down.

Favorable Credit Requirements

If you're looking for a mortgage with better credit requirements than what's required by most lenders, then an FHA loan might be right for you. To qualify for an FHA mortgage, borrowers must have a minimum credit score of 580 — which is lower than most other types of mortgages require — but there are no minimum income requirements.

Fixed Rate Loans

Fixed-rate mortgages are available with FHA loans. Fixed rates assure that your monthly mortgage payment will not change for the life of the loan. This is helpful for budgeting purposes and for planning for future expenses such as college tuition or retirement savings.

Possible Home repairs financed into the loan amount

When you purchase an existing home, you may want to do some repairs or renovations before moving in. These types of improvements can be financed into your FHA loan.

This allows you to make necessary repairs as soon as possible after closing on your home purchase—and also reduces the chance that you'll need to use cash out of pocket when it comes time to make these improvements. If you plan on selling your home in the future, this can also help increase its resale value!

The Best Things to Do in Lee County, Florida

Lee County, Florida, is a unique place to live. It is home to some of the most incredible places in the state, including the largest shopping mall in North America and wildlife refuge with nearly three million acres of land.

You can choose from plenty of great attractions for kids in Lee County, Florida. Here are some of the best:

Six Mile Cypress Slough Preserve

The preserve is a great place to explore nature and wildlife. The preserve offers a boardwalk, hiking trails, and an observation tower that provide great views of the marsh, where you can see alligators, otters, and birds. The park also offers educational programs for kids and families.

Zoomers Amusement Park

Zoomers Amusement Park features rides for children of all ages. You can even enjoy an ice cream cone while watching your little ones enjoy their favorite rides. There is also a snack bar and gift shop on site. The park is open daily from 10 a.m.-5 p.m., except on Christmas Day (and closed during inclement weather).

Calusa Nature Center and Planetarium

The Calusa Nature Center & Planetarium is located at 23905 San Carlos Blvd., Fort Myers Beach. The center offers hands-on activities for kids and exhibits highlighting Florida's natural resources such as plants, animals, water quality issues, and more. Its Kids Zone exhibit area is designed just for children ages eight through 12 years old (or younger with parental supervision).

Manatee Park

This park is located in Fort Myers and features over 30 miles of hiking, biking, and horseback riding trails. You can also find an array of animals such as manatees, alligators, turtles, and snakes at this beautiful park.

Hispanic cuisine

The top three restaurants specializing in Hispanic cuisine include La Cabaña Cuban Restaurant & Bar, El Trompillo Mexican Restaurant & Cantina, and Tacos de la Villa Mexican Grill & Bar. Each restaurant offers authentic dishes with fresh ingredients that will leave your mouth watering!


If you are interested in getting a loan with an FHA, it's a good idea to start looking at homes now. The sooner you find one that fits your needs and is within your price range, the easier it will be to get pre-qualified for financing before other buyers get there.

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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