Understanding FHA Loans
An FHA loan is a mortgage provided by a bank or credit union and insured by the Federal Housing Administration (FHA). The advantages of an FHA loan include low down payments, flexible underwriting guidelines, and relatively low-interest rates. For many homebuyers, these benefits make FHA loans much more attractive than conventional mortgages.
However, traditional lenders typically require borrowers to pay between 5% and 20% down on their loans as a down payment—amounts that may be difficult for first-time homeowners to come up with.
Fortunately, some options are available for Okaloosa County residents who want to take advantage of an Okaloosa County Florida FHA Loan but don't have enough cash for a significant initial investment in the home-buying process.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Okaloosa County, Florida.
What is an FHA Loan?
FHA loans are government-backed mortgage loans that allow borrowers to purchase homes with as little as a 3.5% down payment. These loans have become the most popular type of mortgage for first-time home buyers because they allow people to buy their first house with a low-down payment and good credit score.
Many think FHA loans are only available to borrowers with poor credit scores, but this is incorrect. The truth is that you can qualify for an FHA loan even if your credit score is less than 620!
What is the Minimum Credit Score Needed to Qualify for an FHA loan?
The acceptable credit score for an FHA loan is 500. You can qualify if your credit score falls between 501 and 670.
FHA loans have a wide range of minimum credit scores, but lenders usually set their requirements for the lowest acceptable scores they will accept to make the loan. The FHA does not mandate what a lender can or cannot do when setting these minimums.
A borrower's financial situation has much more to do with whether they'll get approved than their credit score. Many other factors are involved in determining whether or not an FHA lender will support somebody—these include income levels and debt-to-income ratios, employment history, and overall job stability.
Who Is Eligible to Apply for an FHA Loan?
Anyone who meets the income and credit requirements is eligible. You can apply for an FHA loan if your combined monthly income is at least 3.5 times the monthly mortgage payment.
You will also need enough money to make a down payment on your new home in Okaloosa County, Florida. This amount varies depending on what type of property you're buying, but it must be at least 3% of the purchase price of your home (or $2,000).
FHA loan Income Limits in Okaloosa County, Florida
Low-down payment options can help you purchase if you have a lower income. FHA loan Okaloosa County offers three different down payment options. The most popular is the 3.5% down payment mortgage, which requires only 3.5% of your home's price as a down payment—the most allowed by FHA loans nationwide.
If your income falls between $87,689 and $94,320 for two-unit dwellings (non-targeted) or between $100,842 and $104,850 for three-unit homes (targeted), this option may be available to you!
An option allows buyers with higher credit scores to get their down payments financed through an FHA streamline to refinance program if their combined income does not exceed 100 % of the state's median family salary (MFMS). This means that if the MFMS in Okaloosa County is $87k/year, they could qualify using this program, no matter what type of property they want.
How Much Can I Borrow with an FHA Loan in Okaloosa County, Florida?
Okaloosa County, Florida's maximum FHA loan limits are $ 386,601 for non-targeted properties and $ 472,512 for targeted properties. These amounts are calculated based on the single-family median home price in Okaloosa County.
The minimum down payment required is 3.5% of the purchase price if you're purchasing with an FHA loan, but this can be lowered by adding private mortgage insurance (PMI). You'll need a down payment of at least 10% to avoid PMI altogether.
FHA loan 3.5% Down Payment
Florida is a great place to buy a home, but it cannot be easy to determine a down payment. FHA loans offer low-down payment options that make it possible for you to be in your dream home.
These loans have a 3.5% minimum down payment requirement and are available in Okaloosa County, Florida, and other areas of the state. Several FHA mortgages require less than 20% as equity or cash-out from the borrower.
What Are the Benefits of an FHA loan?
The Federal Housing Administration (FHA) loan program was created to help first-time homebuyers with limited funds for a down payment. The FHA loan program is government-backed and requires a 3.5% minimum down payment, but there are certain circumstances where you can put less than that into your home purchase.
In Okaloosa County, Florida, several low-down payment options are available through the FHA loan program.
Other benefits of the FHA loan include:
Less stringent qualifications - To qualify for an FHA loan, your credit score must be at least 580, but some lenders may require a minimum score as high as 700. The FHA doesn't set any minimum credit requirements for borrowers. Also, borrowers with lower credit scores often have higher interest rates than conventional borrowers with similar debt-to-income ratios.
Lower monthly mortgage insurance premiums (MIP) - The MIP on an FHA loan is 1.75% of the original loan amount for the first year and 0.4% monthly after that.
More home-buying help for first-time homebuyers - First-time homebuyers can take advantage of the 3% down payment assistance offered by some lenders through the National Housing Act Mortgage Program (NHS). This program allows qualified buyers to receive up to $8,000 toward their down payment and closing costs (but not prepaid items like property taxes).
Allow gifts money - You can use gifts from family members or other sources as part of your down payment, which reduces the amount of money you need to pay upfront before buying a home.
Easier approval - One advantage of working with an approved lender is that many lenders will approve borrowers who might not otherwise qualify for financing based on their income alone.
- More flexible credit qualification - You may be able to get an FHA loan if you have a low credit score. The maximum amount will depend on your income and other factors, but you can qualify for as much as six times your annual income.
Down Payment Assistance Programs
Down payment assistance programs are available in Okaloosa County, Florida. Homeownership programs are a great way to help borrowers buy a home with little or no money down.
Florida Assist Second Mortgage (FL Assist)
One of the many ways that the government can help you get a home loan is through Florida Assist Second Mortgage (FL Assist). FL Assist is a second mortgage that provides down payment assistance to eligible homebuyers. The program offers up to $7,500 in down payment assistance with 0% interest for your 2nd mortgage.
In many cases, we can offer this type of financing on homes in Okaloosa County and throughout much of Northwest Florida!
Florida Homeownership Loan Program Second Mortgage (FL HLP)
The FL HLP is a second mortgage that assists qualifying homebuyers who cannot qualify for a first mortgage because they do not have sufficient income or assets. The FL HLP can be used to finance the down payment on a new home, and it can also be used as part of your transaction when purchasing an existing home.
The loan amount is fixed and may not exceed $10k. However, if you are purchasing an existing property and the seller accepts it, you may use all or part of this amount to pay off existing liens and debts the seller owes so that they no longer appear in your name after closing.
This program has been designed with unique features such as:
Reduced interest rates (1% less than the market rate),
Extended repayment terms up to 15 years (with monthly payments starting at $0)
- No money down is required because funds come directly from Florida Housing, so there's no need for upfront costs like closing costs!
3 % HFA Preferred Grant
The 3% HFA Preferred Grant is a non-repayable grant that helps borrowers with their down payment and closing cost on their FHA Florida home loan.
The 3% HFA Preferred Grant offers up to $10,000 as a non-repayable grant for borrowers who meet the following criteria:
Buyers must qualify for an FHA loan in Okaloosa County, Florida.
Buyers must be purchasing or building a single-family residence (e.g., new construction) that is located within one of the designated target areas.
Florida Military Heroes Loan
If you are a military member or your spouse is on active duty in the U.S. Armed Forces, you might be eligible for a Florida Military Heroes Loan. This program was created to help heroes and their families who have fallen on hard times after returning from overseas and have had difficulty securing home loans due to missing documentation or having poor credit scores.
The benefit of this program includes reduced interest rates on your FHA loan for up to 30 years (40 years if you're disabled). In addition to this benefit, the closing costs are also lower than they would typically be with an FHA loan: they're capped at 3% instead of 6%. If that wasn't enough, there's also no mortgage insurance required!
To apply for this program, all that's required is proof that you currently serve in the U.S Armed Forces either as an active-duty service member or as a reservist/guard member called upon by federal order.
If not already present on file with FHA, additional documents, such as DD214 (military discharge certificate), VA letter showing disability benefits received, and other similar documents depending upon the situation.
Some cases may require additional verification, such as tax returns or W2 forms before final approval can be given by HUD (Housing & Urban Development). The entire process typically takes 2-5 weeks depending upon what type(s) data needs to be verified before being processed through which agency is involved in approving loans like FHA.
However, changes could occur without notice due to circumstances beyond control, such as natural disasters. We suggest contacting them directly if questions arise about progress not listed here - information about contact numbers/addresses can often be found on their website too!
State Housing Initiatives Partnership (SHIP)
The State Housing Initiatives Partnership (SHIP) program may be suitable if you're looking for a low-down payment option. It is a down payment assistance program that provides up to $30K in assistance with purchasing your first home. The amount is forgiven after ten years, but first-time home buyers can only use it.
Deposit the Cash into a Bank Account
You must deposit the cash you have saved into a bank account before you apply for the loan. If you do not have enough money to cover your down payment and closing costs, consider getting a home equity loan or line of credit used as a source of funds for both.
It's important to note that using this type of financing will be included in debt-to-income ratio calculations when considering approval for your FHA loan application.
Wait for two months after the cash deposit before you apply for the loan. The low-down payment options are available for FHA loans, and you can apply for a loan after your cash deposit has gets reported to the credit bureau.
However, if you apply for the loan before two months have passed since you made your cash deposit, you will not be eligible for these low-down payment options.
Top Things to Do in Okaloosa County, Florida for Kids
Okaloosa County, Florida, is home to some of the best family-friendly activities in Florida. From the beach to the golf course, there's something for everyone in this part of Northwest Florida. Here are five fun things to do with kids in Okaloosa County, Florida:
The Track Destin
The Track is an amusement park with many rides and attractions, including the coaster right over the beach. It's just north of Destin, so it's a great place to visit if you're staying in one of the beachfront hotels or condos. There's also a water park called Splash Adventure that's open only during summer.
This aquarium has more than 5,000 animals representing 300 species worldwide. Kids will love touching sharks and rays, seeing penguins up close, and learning about marine life in Florida Bay and beyond.
If your kids like dolphin shows, check out Dolphin Days at SeaWorld Orlando for an experience closer to home.
Heritage Museum of NW Florida
If you are interested in Florida history — or want to see what life was like before Disney World existed — this museum is worth visiting. It's located on Eglin Air Force Base near Fort Walton Beach (about an hour and a half away from Destin).
You'll find everything from old tools to vintage cars here and plenty of information about local Civil War battles fought on Eglin soil during the 1860s and 1870s.
Junior Golf at Shalimar Pointe
The Junior Golf Association is a terrific way for kids to learn about the game of golf, and it's also an excellent way for parents to get out and play with their children.
The JGA offers instructional programs, competitive tournaments, clinics, and camps throughout the year. There are separate leagues for boys and girls in each age group from 5-10 years old.
Several restaurants in Fort Walton Beach serve Hispanic cuisine, including Casa Mimi's Mexican Restaurant, which offers traditional dishes like fajitas and burritos and more unique items like chile Rellenos stuffed with cheese, seafood, or chicken along with handmade tortillas made from scratch.
If you're looking for something different, head to Shalimar Pointe and check out some of the best Mexican food in the area. It's also a great place to go if you want some authentic Cuban cuisine that will make your mouth water.
FHA loans are an excellent option for first-time home buyers or people who don't have much money to put down on their home purchases. They also work well for low-income borrowers and borrowers with less than perfect credit scores.