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

This blog will tell you everything you need to know about FHA loans, from the FHA program to how you can qualify for this type of home loan. Let's delve right in.

The FHA Loan Program

The FHA is a government agency that provides mortgage insurance on loans made by FHA-approved lenders. This insurance protects lenders from losses if a borrower defaults on their loan. As a result, lenders can provide financing to borrowers who would otherwise be unable to qualify for a mortgage.

The FHA program has helped insure more than 40 million mortgages. FHA loans are prevalent among first-time homebuyers. Over 83 percent of FHA purchase loans in 2018 went to first-time homebuyers.

FHA loans are available to all types of borrowers, including people who have previously filed for bankruptcy or have a low credit score. FHA loans are available for many property types, including single-family homes, manufactured homes, and condominiums.

Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Washington County, Florida.

How to Qualify for an FHA Loan

To be eligible for an FHA loan, borrowers must have a minimum credit score of 580. Those with a score between 500 and 579 may still be eligible for an FHA loan, but they will need to put down a 10 percent down payment instead of the usual 3.5 percent.

Borrowers must also have a steady employment history. This means borrowers must have been employed for at least two years in the same job or with the same employer. Self-employed borrowers may also qualify if they can show a consistent income over the past two years.

In addition to having a solid credit score, borrowers must also have a steady income and a Debt-to-Income (DTI) ratio that falls below 43 percent. Finally, all borrowers must have a valid Social Security number to apply for an FHA loan.

Down Payment Assistance Programs

Several down payment assistance programs are available for borrowers who can't raise the minimum down payment for an FHA loan.

Florida Housing, for example, offers a program that provides up to $10,000 in down payment assistance. This can be an excellent help for borrowers who might otherwise be unable to qualify for an FHA loan.

There are also a number of other down payment assistance programs available from state and local governments and private organizations. These programs can provide a much-needed boost for borrowers trying to save up for a down payment.

FHA Loan Limits in Washington County, Florida

FHA loan limits are the maximum loan amounts that the Federal Housing Administration can insure. They're set at the county level and vary based on the type of housing unit.

The minimum limit for an FHA loan in Washington County, Florida, is $420,680 for a single-family home. For a two-family home, the minimum limit is $538,650, and for a three-family home, the minimum is $651,050.

For a four-family home, the minimum limit is $809,150. Loan limits change yearly, so it's crucial to stay up-to-date on the latest information.

The FHA Loan Application Process

Now that you know more about FHA loans, you may wonder how to apply for one. The FHA loan application process is not as complicated as many people think. Here are the steps you need to take to apply for an FHA loan:

Step 1 - Find a Lender Who Offers FHA Loans

Many lenders out there claim to offer FHA loans, but not all of them are actually approved by the Federal Housing Administration to do so. As a result, it's essential to do your research and find a reputable and experienced lender handling FHA loans.

An excellent place to start your search is by asking friends, family, or your real estate agent for recommendations. You can also check online directories, such as the one maintained by the Department of Housing and Urban Development, to find a list of approved lenders.

Once you've found a few potential lenders, compare their terms and conditions before making a final decision.

Step 2 - Get Pre-approved for an FHA Loan

The next step is to get pre-approved for an FHA loan. This means you'll need to provide the lender with basic information about your financial situation, including your income, debts, and assets. Once the lender has this information, they'll be able to give you a pre-approval letter stating how much money you're eligible to borrow.

Why is this step crucial? Because it's this pre-approval letter, you'll need to submit a formal loan application. Without it, the lender will not process your application.

Additionally, getting pre-approved for an FHA loan is an excellent way to show sellers that you're serious about buying a home and have the financial means to do so. This can give you an edge over other buyers who are not pre-approved and may make the seller more likely to accept your offer.

Step 3 - Start Looking for a Home

Now that you've been pre-approved for an FHA loan, you can start looking for a home. There are many ways to find homes for sale, including online listings and open houses. But arguably, the best way to do this step is to work with a qualified real estate agent. This is where the fun begins!

An excellent real estate agent will be familiar with the FHA loan process and will be able to help you find a home that meets your needs and is also eligible for an FHA loan.

Step 4 - Make an Offer on a Home

Once you've found a home you want to make an offer on, it's time to start negotiating with the seller. This is where an excellent real estate agent can come in handy. They can help you come up with a fair and reasonable offer based on the market value of the home and their knowledge of the seller's situation.

Remember that the FHA requires an FHA-approved appraiser to appraise homes purchased with an FHA loan. This means that the home must be worth at least as much as the loan amount you're looking to borrow.

So, if you're planning on making a lowball offer, it's likely that the appraisal will come back lower than the asking price, and you'll need to either increase your offer or walk away from the deal.

Step 5 - Submit a Formal Loan Application

If you've been lucky enough to find a seller willing to accept your offer, officially, the next step is to apply for the FHA loan. This will involve submitting a formal loan application to your lender and some additional documentation.

The documentation you'll need to provide includes your most recent pay stubs, tax returns, bank statements, and proof of any other assets you may have. The lender will use this information to verify your financial situation and determine whether you're eligible for the loan.

Step 6 - Wait for Loan Approval and Close on the Home

After you've submitted your loan application, all you can do is wait for the lender to approve it. This process can take a few days or even a few weeks. Once your loan has been approved, the next step is to close on the home.

Closing on a home is when the final paperwork is signed, and the home officially becomes yours. This process can take a few weeks to complete and usually requires the help of a qualified real estate agent or lawyer.

Store Your Money Well

When you're ready to buy a home, you'll need to have cash on hand for a down payment and closing costs. One mistake many people make is keeping this money in cash, usually hidden away in a mattress or safe.

While it may seem like a good idea to keep the money close at hand, it's a terrible idea. If your home is burglarized or there's a fire, your cash could be lost or stolen.

Instead of keeping your loan money in cash, you should open a bank account and deposit the money. Once it's in the account, let it sit for at least 60 days to ensure it's not needed for other purposes.

After 60 days, you can start shopping for a home with confidence knowing that you have the funds to make a down payment and cover closing costs.

Why Are FHA Loans Beneficial?

Opting for an FHA loan is one of the best decisions you can make when buying a home. Here are five reasons why.

You Get to Enjoy Low Down Payment

One of the best things about FHA loans is that you only have to put down a small amount of money upfront. This is excellent news for anyone who doesn't have much cash saved up or wants to keep their savings intact for other purposes.

With a traditional mortgage, you would typically have to put down 20 percent of the purchase price, which can add to a lot of money. But you can put down as little as 3.5 percent with an FHA loan. Even better, you can use gift funds to pay for the down payment.

FHA Loans Have Lenient Credit Requirements

One of the biggest hurdles to homeownership is having a low credit score. Conventional loans typically require a FICO score of at least 620. That's often out of reach for many first-time buyers. On the other hand, FHA loans only require a FICO score of 580 to qualify for the lowest down payment option.

FHA loans are also much more forgiving when it comes to credit history. If you have a few late payments or collections on your report, you can still qualify for an FHA loan as long as you meet the other eligibility requirements.

FHA Loans Are Assumable

Most loans require the borrower to pledge their home as collateral. This means that if the borrower defaults on the loan, the lender has the right to seize the property and sell it to recoup its losses.

However, FHA loans are assumable, meaning that a qualified buyer can take over the loan without going through the entire application process anew.

This is a significant benefit for sellers, making their homes much more attractive to potential buyers. It also gives buyers some flexibility in financing, as they can assume an existing loan with favorable terms rather than a new one.

In short, the assumability of FHA loans makes them an excellent option for buyers and sellers.

FHA Loans Have Competitive Interest Rates

FHA loan rates have slightly lower interest rates than conventional loans. This difference may not seem like much at first, but over the life of a loan, it can add up to significant savings.

An adjustable-rate FHA loan can be an excellent choice for borrowers looking to save money on their monthly payments. In addition, FHA loans are available with both fixed and adjustable rates, so borrowers can choose the option that best suits their needs.

So whether you're a first-time home buyer or looking to refinance your existing loan, an FHA loan with a competitive interest rate is a great option.

FHA Loans Come With Mortgage Insurance

Mortgage insurance is a necessary evil if you're putting less than 20 percent down on your home. The good news is that FHA loans come with mortgage insurance that's much more affordable than the private kind.

FHA mortgage insurance is known as MIP, and it's paid in two parts: an upfront premium that's added to your loan balance at closing and an annual premium that's paid as part of your monthly mortgage payment

Fun Activities for Kids and Family in Washington County, Florida

One of the best things about becoming a resident of Washington County is having access to all of the great things to see and do in the area.

There's something for everyone to enjoy. Here are five of our favorite family-friendly activities in Washington County:

• Hiking at Falling Waters State Park - With over eight miles of hiking trails, Falling Waters State Park is a great place to explore on foot. The park also has a 67-foot tall waterfall, the tallest in the state.

• Canoeing or Kayaking Down the Chipola River - The Chipola River is a great place to paddle, with its clear waters and gentle currents. There are several canoe rental companies in the county, so you can quickly start your adventure.

• Visiting One of the Many Museums - Washington County is home to several museums, including the Panhandle Pioneer Settlement and the Chipola River Heritage Museum. These museums are great places to learn about the history and culture of the area.

• Camping at Blue Spring State Park - Blue Spring State Park is an excellent place to camp, with its scenic views and convenient amenities. The park also has a swimming area to cool off on hot days.

• Enjoying the Local Cuisine - Washington County has some excellent Hispanic restaurants, thanks to its thriving Hispanic population. Try the Cuban sandwiches and pastelitos at one of these eateries. Our favorites include El Rinconcito Cubano and Latin American Cafeteria.

Apply Today and Enjoy Washington County, Florida!

Thanks to the gorgeous scenery, warm climate, and friendly people, Washington County remains a great place to buy a home.

And with an array of exciting activities to enjoy, it's no wonder Washington County is a popular destination for families and retirees. So if you're considering moving to Washington County, be sure to apply for an FHA loan today.

With its competitive interest rates and low down payment requirements, an FHA loan is a great financing option for first-time home buyers and those looking to refinance. Contact a local FHA-approved lender today to get started on your loan application.