What is an FHA Loan? A Jacksonville FL FHA loans may get you into a home with a low down payment. An FHA loan provides a government-insured loan with flexible loan options with just 3.5% down payment and minimum 580 credit score although 620 is highly preferred. One of the biggest hurdles that first time homebuyers face is saving up for a sizable down payment on a home. Even experienced homeowners may need to plan for a long time for a new home purchase. Fortunately, FHA loans may help some Jacksonville, FL FHA loans buyers get into the home of their dreams with a lower down payment.
Jacksonville FL FHA Loans
FHA loans are mortgages backed by the U.S. Federal Housing Administration. Lenders, such as banks and credit unions, that provide FHA loans provide funding for home purchases while requiring a lower down payment. Buyers may get into a new home with as little as 3.5% down with a Jacksonville FL FHA Loan.
Using conventional loans, a lower down payment requires the borrower to get private mortgage insurance. This special type of insurance protects the lender just in case the borrower is not able to pay. The cost of PMI is added to the monthly payment until the amount of the loan reaches 20%. FHA loans, on the other hand, do not require PMI because they are backed by the U.S. government. Additional scrutiny is often required during the loan application process using an FHA loan.
What is required for an Jacksonville FL FHA Loan?
Many of the same documents are required for an FHA loan that any potential lender will want to see: employment history, appraisal, debt-to-income ration. A few additional stipulations are also attached to the FHA loan process. Buyers may have to bring 3.5% of the purchase price as a down payment, more if they have a credit score below 580. FHA loans are only available for the borrower’s primary residence.
Credit requirements may also be lower for FHA loans, given other factors demonstrate that the borrower is able to manage their money responsibly. Each lender looks at individual applications and may ask for additional documentation or explanations. They are often able to work with buyers with a lower credit score or shorter credit history than in other situations.
How FHA Loans Work
- Purchase your home with as little as 3.5% down payment (compared to 20% required on most loans).
- 30-, 25-, 20- and 15-year terms are all available with fixed rates.
- 5-year adjustable rate mortgage available.
- Pay your mortgage off at any time without pre-payment penalties.
The three major items needed for approval for a refinance or purchase are as follows: CASH, CREDIT & INCOME.
- CASH – Cash means where is your down payment located and how much do you have. Do you have enough cash to buy the home such as 3.5% down for an FHA loan or 3%-5% down for a Conventional Loan. These are the lowest available besides a VA Loan which is No Money Down. Therefore, we need to trust and verify where the cash is coming from whether it be a checking account, savings account, 401K, investment account, or gift funds from a family member. This item MUST be trusted and verified through documentation.
- CREDIT – We must pull credit and verify a credit score and a debt to income ratio among that credit score and the debts tied to that credit. The minimum available is down to a 550 credit score although this is marketable it is nearly impossible. Most will need to be at least 580 credit score to have a swinging chance at clearing a DU or LP approval. In order to have the most likelihood for closing is a minimum of a 620 credit score. A 620 is normally attainable for an FHA loan as this is a government backed loan designed to approve lower credit score buyers and offer a lower down payment of just 3.5%. Therefore we need to pull credit and hopefully with will be a high 700 score and we can do a Conventional Loan is the most ideal situation unless you are a VA buyer.
- INCOME – Finally income needs to be trusted and verified with tax returns, pay stubs, and W2’s. These items detail into the most recent two pay stubs or last 30 days. If you are paid weekly we will need 4 pay stubs. If you are commission based we will need two years of tax returns and will average your commission among those two years. If you are salary we will want to see your pay stubs and W2’s.
Have questions about a Jacksonville Florida FHA Loan? Give us a call! One of our mortgage specialists would be happy to answer all of your questions for Jacksonville FL FHA Loans.
**369 Home Loans is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government. We can help close a Jacksonville FL FHA Loan.
