Complete Guide to FHA Loans in Florida: Requirements, Limits & Qualifications

The Federal Housing Administration (FHA) loan program was developed during the Great Depression in an effort to stabilize the housing industry. The program was designed to help veterans, first-time home buyers and Americans who earned a lower income borrow money to purchase property — which it continues to do today.

While there are several types of FHA mortgages, two of the most common are the basic 203(b) loan and the 203(k) rehabilitation loan. The 203(b) mortgage is the more straightforward of the two, and is designed for FHA-qualifying borrowers who intend to purchase or refinance a primary residence.Citation

For FHA borrowers who plan to make renovations on property they already own or are purchasing, it’s worth considering taking out a 203(k) mortgage. With this loan type, borrowers have two options:

1. A limited 203(k) mortgage, where borrowers can finance up to $35,000 for non-structural repairs, improvements and upgrades
2. A standard 203(k) loan, which is only intended for major repairs, renovations or structural work — totaling more than $5,000 — done to single-family homesCitation

If you’re a Florida home buyer who qualifies for an FHA loan, securing one comes with several advantages when compared to a traditional mortgage. In general, Florida FHA loans come with:

• Lower down payments — With the right credit score (580 or higher), your down payment can be as low as 3.5% of the purchase price. Borrowers with credit scores that are lower than 580 will need to make larger down payments.Citation
• More lenient credit score requirements — Traditional mortgages typically require a credit score of at least 620 to qualify. With an FHA loan, it’s possible to get approved with a minimum credit score of 500.Citation
• Flexible debt-to-income ratio requirements — While higher debt-to-income ratios (DTIs) can usually disqualify applicants from securing a mortgage, it’s possible to get approved for an FHA loan with a DTI of 50% or higher. In these cases, borrowers will need to compensate for a high DTI through other factors, such as an exceptional credit score. For those with credit scores below 579, a DTI of less than 43% is typically required.Citation
• Eligibility for a streamline refinance — Once they’ve lived in their homes for several years, it’s not uncommon for homeowners to want to refinance their properties. If the original purchase was financed through an FHA loan, Florida homeowners may be eligible for a streamline refinance, which comes with benefits like limited credit documentation and underwriting.Citation

In order to qualify for a Florida FHA loan, potential borrowers must meet several eligibility criteria. At the very least, applicants must:

• Have a valid Social Security number
• Be a lawful resident of the United States
• Have held steady employment for at least two years
• Prove that they are able to sustain the monthly payments
• Get signoff on the property from an FHA-approved appraiserCitation

In addition to these preliminary requirements, borrowers must also have:

• A credit score of at least 500, though better rates are available for those with higher scores
• Cash on hand to afford the down payment, which can range from 3.5% to over 10%
• A maximum DTI of 50%, though lower is preferred
• Mortgage insurance, which is required no matter the size of the down paymentCitation

When using an FHA loan to purchase a home, it’s especially important to pay attention to the price. This is because there are limits to the maximum amount homebuyers can borrow. The FHA’s lending limits are calculated and published on a yearly basis and vary depending on factors such as home type and location within the U.S.Citation

You can see the current loan limits for all Florida counties here. But for quick reference, the chart below features maximum loan amounts for the state’s ten most populous counties.

Chart data populated from FHA.com.

Q: What documents are needed to apply for an FHA loan in Florida?

A: To apply for an FHA loan, Florida homebuyers need to provide the following items:

• A valid, government-issued ID (such as a driver’s license or passport)
• Proof of your social security number
• Any W-2s or 1099s you’ve received over the past two years
• Tax returns from the previous two years
• Pay stubs from the past 30 days
• A current income statement or business balance sheet
• Statements from you checking and/or savings accounts
• Recent documentation of any and all debts

Q: What are the benefits of an FHA loan in Florida?

A: Advantages of an FHA loan include low down payments, lenient credit score and debt-to-income ratio (DTI) requirements and potential eligibility for a streamline refinance.

Q: How do I apply for an FHA loan in Florida?

A: To apply for an FHA loan, you’ll need to find an FHA lender to help you with the application process. Before applying, it’s a good idea to make sure your credit score and financial situation are in excellent standing for the best possible chance at being approved for the lowest rates.

Q: Can I use an FHA loan for a property that is not my primary residence?

A: No. FHA mortgages are only available for principal residences, meaning that rental (with the exception of an owner-occupied rental property) and seasonal homes aren’t eligible for this type of financing.

Q: Are FHA loans only for first-time homebuyers?

A: Although the FHA loan program is a popular choice for first-time buyers, you don’t need to be one in order to be eligible.

Your FHA lender plays an important role in your home buying process. That’s why it’s important to work with someone you trust, who has a track record of being a good communicator and client advocate. They should also be able to offer competitive rates and fees.

Additionally, a good FHA lender should:

• Allow for credit scores as low as 500
• Provide FHA 203(k) loans

The team at Blue Water Mortgage has the skills and experience necessary to help you evaluate all your options and find the FHA loan that best suits your unique needs. If you’re unsure whether you qualify for an FHA loan, speak with an experienced mortgage broker today to start your journey toward homeownership.