Florida mortgages have been helping Florida home buyers achieve their goal of homeowners for over 80 years. Florida FHA Loans are backed by the Federal Housing Administration (Also known as FHA) and processed exclusively through approved FHA lenders, brokers and banks here in Fla.
FHA provides the backing of the loan so the lender can offer more risky loan products. For example, FHA loans typically have a lower down payment and better loan rates for borrowers with lower credit scores. So low in fact, you often get an FHA loan with just a 3.5% down payment and credit scores as low as 620.
About 15 years ago during the Florida Housing Boom, FHA Home Loans weren’t as popular because of the ample supply of mortgage credit with little to no required down payment. Anyone with a pulse could essentially obtain 100% financing back then. Conventional Fannie Mae Loans with 0% down payment and reduced loan documentation requirements. After the housing market crash, as Fannie Mae and other Florida loan lenders removed these riskier mortgages, FHA stepped in and Florida FHA home loans became the only option for borrowers with limited money for a down payment or a credit score below 620.
So what are the guidelines for the Florida FHA Loan? Let’s take a closer look at the Tampa Home Buyer FHA Guide –
- Florida FHA loans are available for single-family homes, townhomes and condos. However, condos must be listed on the FHA Condo Approval List. Contact us if you have questions regarding the eligibility of a particular Condominium Project around Tampa. The home seller can be anyone – a bank, investor, or private seller.
- FHA home loans are only available for a borrower’s Primary Residence. Investment, Rental homes, and vacation homes are not allowed – all homes purchased must be owner-occupied.
- Low Credit Scores- Borrowers with credit scores as low as 620 can qualify for an FHA loan in Florida & borrowers with credit scores over 680 often will receive better interest rates through a Florida FHA mortgage than a conventional mortgage.
- An FHA home loan in Florida requires only a 3.5% down payment. Borrowers can choose to put down more money if they like. However, over 5% down will typically result in a conventional loan.
- The maximum cash-out on an FHA Refinance is 85%
- Florida FHA Loans have no prepayment penalty. You can pay the mortgage down or off at any time without penalty.
- FHA loans do have mortgage insurance, but unlike conventional loans, the loan is not re-underwritten by the company providing the mortgage insurance. Because of this, the underwriting process on an FHA loan is less restrictive than a conventional loan that has mortgage insurance – over 80% loan to value.
What are some drawbacks of the FHA loan?
- The closing costs for an FHA Mortgage in Florida are higher than the closing costs on a Conventional Mortgage. Why? The government passes part of the cost of insuring the Florida FHA loans to the borrower.
- FHA Up-Front Funding Fee: This is equal to 1.75% of the Loan Amount. The funding fee is financed into the loan amount though so it doesn’t come out of the borrower’s pocket at closing.
- The Florida FHA County Loan Limit is often lower than it is on a conventional mortgage- meaning borrowers often can borrow less money than they would be able to on a conventional loan. See the Tampa – St. Petersburg FHA loan amount limits here.
- The monthly mortgage insurance on an FHA loan can be more expensive than it is on a conventional mortgage with borrowers that have perfect credit. When the down payment is only 3.5%, the monthly mortgage insurance costs would be .55%. However, conventional mortgage insurance can be much higher for buyers with credit scores below 680. See the latest FHA MIP chart here.
Other FHA programs: Florida HUD $100 dollar down program:
This is a special FHA loan that allows a home purchase with only a $100 down payment. However, this program is only reserved for HUD-owned homes in the Tampa area. Learn more about the FHA HUD $100 down program here.
Finally, home buyers on the east side of Hillsborough County – near Riverview, Sun City, Ruskin, etc, will want to learn about the 100% USDA home loan here. Pinellas County is not eligible for the USDA program.
Questions about applying for an FHA loan? Please reach out to us today by calling 800-743-7556 or just submit the quick Info Request Form on this page.
FHA Mortgage Source is Florida’s leader in FHA financing. Serving all of Fla & GA including Hillsborough and Pinellas County – Clearwater, Dunedin, Gulfport, Indian Rocks Beach, Indian Shores, Kenneth City, Largo, Madeira Beach, North Redington Beach, Oldsmar, Palm Harbor, Pinellas Park, Redington Beach, Safety Harbor, Seminole, St. Petersburg, Sunset Beach, Tarpon Springs. Apollo Beach, Balm, Brandon, Dover, Gibsonton, Lithia, Lutz, Plant City, Riverview, Ruskin, Seffner, Sun City, Tampa, Temple Terrace, Thonotosassa, Valrico