Florida’s allure includes its beaches, diverse metropolitan areas, and affordable housing options. It’s a popular choice for first-time homebuyers who are looking to get into a new home. But buyers should know the FHA loan process and requirements before they start shopping around for their dream home.
FHA loans are government-insured mortgages aimed at making homeownership more accessible for homebuyers with lower credit scores and limited savings. They typically have lower down payment requirements than conventional mortgages and are more flexible with regard to credit history.
In addition to a credit score of at least 580, borrowers need to be ready to put down a minimum of 3.5% upfront and can have debt-to-income ratios up to 43%. This is significantly higher than the Conventional loan maximum of 43% and can allow borrowers who may have missteps in their credit history to get into a home.
When it comes to the purchase of a home, FHA lenders will require that the property meets certain standards for safety, security, and structural integrity. This could limit your pool of property choices, especially if you’re eyeing a fixer-upper that might not meet FHA standards.
Lenders will also need to verify that borrowers have a steady source of income and can prove employment. They will also need to review two years of tax returns and, if self-employed, two years of business tax returns as well as personal tax returns. The lender will review these documents to ensure that the borrower’s income is consistent and that it has not significantly dropped over time. florida fha loan application