Palm City, FL FHA Loans
FHA Loan Company in Palm City FL
Contrary to popular belief, it is not always necessary to provide a 20% down payment to secure a mortgage. Traditional mortgage loans certainly have required this in the past, however, times have changed, and it is now possible to buy a house with a down payment of only 3.5%, if you do it the correct way.
FHA (Federal Housing Administration) loans are ideal for those who can afford a mortgage but cannot manage a large down payment. FHA mortgage loans certainly make it easier for more people to buy their own homes in the Palm City, FL area, however, they are not ideal for everyone.
Find out what an FHA loan is, how you apply, and whether it is a good fit for your needs with the help of Compass Mortgage in Sister Bay.
What is an FHA Loan?
An FHA loan is insured by the FHA and issued by an approved FHA lender, such as Compass Mortgage. The two key differences between an FHA loan and a traditional loan are:
- The down payment can be as low as 3.5%
- People with lower-than-average credit scores can still be accepted
For example, if your credit score is 580 or above, you will qualify. Those with scores between 500 – 579 can still be qualified but would need a down payment of at least 10%. As a comparison, most lenders will only accept your application if your credit score is 620 or more.
What is important to understand is FHA home loans are provided by an FHA-approved lender in the Palm City, FL area. The difference is that the FHA guarantees the loan. This means that it is a requirement for you to purchase mortgage insurance from the FHA and pay the monthly premiums directly to them. Therefore, if you default on the loan, the FHA pays the claim directly to your mortgage lender.
Types of Palm City, FL FHA Home Loans Available
Depending on your needs, there are several different types of FHA home loans available. When you apply, our Palm City, FL FHA loan lenders with Compass Mortgage will recommend the most suitable one for you:
- Traditional Mortgage: A loan to finance a primary residence.
- Home Equity Conversion Mortgage: A reverse mortgage program helping those ages 62+ convert the equity in their property while retaining the property’s title.
- FHA 203(k) Improvement Loan: A mortgage specifically designed to incorporate the cost of buying a property and any costs for required renovations and home improvements.
- Section 245(a): This is for anyone who expects their income to increase over the coming years. This type of mortgage begins with lower monthly repayments and increases them over time. The result is a shorter loan term.
- FHA Energy Efficient Mortgage: Similar to the FHA201(k), this type of mortgage incorporates the cost of converting the home to more energy-efficient systems resulting in lower utility bills.
The Primary Residence Rule
Getting an FHA home loan in Palm City, FL comes with one big caveat. The loan must be for the purchase of your primary residence. Therefore, for those looking to buy property as an investment or purchase a vacation home, an FHA loan is not for you.
It is worth noting, however, that you can use an FHA loan to purchase a multifamily property, providing you live in one of the units. Because of this, an FHA loan is a viable option for aspiring landlords.
Once you have purchased a property with an FHA loan, you are required to move in within 60 days, and you must remain living in the property for at least one year. After this time, you are free to move to another property if you wish.
How to Apply for an FHA Loan in Palm City FL
Contact Compass Mortgage, to be your approved Palm City, FL FHA loan provider. We will take you through the approval process to determine whether you qualify for the FHA loan. You will be asked to provide certain documentation during this time.
If you wish, you can go one step further and be committed. This means we take you further into the pre-approval process. The result is you being fully approved and able to provide clear information on the loan we have agreed to give you. The result is a better-than-cash offer that you can provide when you find your ideal home to buy.
The final step is going through an appraisal to determine the value of the home you want to purchase. After this is completed, and the down payment is made, you will be required to pay any closing costs (fees and deposits), after which, the home is yours.
If you would like to find out more about applying for an FHA loan in Palm City FL, and the other types of mortgages available, please contact our team at Compass Mortgage. We are happy to offer you our expert advice and find the perfect loan that places you in your dream home.