Conventional Loans Florida
Take advantage of a conventional loan designed specifically for the Sunshine State to embrace the charms of Florida's sun-kissed beaches and thriving real estate market. District lending provides a personalized approach to borrowers, helping them take the first step to realizing their real estate aspirations in Florida on excellent terms.
With the average household income in Florida being $59,198, most homebuyers will need a loan to achieve their goal, but government-insured loans tend to be limiting in the expensive Florida market. However, the maximum conforming loan of $766,550 covers most properties in the state — the latest numbers show the average home value in Florida is $403,500.
Conventional Loans in Florida
Conventional loans follow the rules established by the government-sponsored enterprises Fannie Mae and Freddie Mac, but they are not government-insured loans such as FHA or VA loans, so they are often more difficult to qualify for.
However, conventional mortgage loans can have better mortgage rates, more options when it comes to the loan term, and they let you purchase both residential and investment properties. Besides Fannie Mae and Freddie Mac standards, each lender will have their own set of requirements.
Florida Conventional Loan Requirements
Getting a conventional mortgage loan means you will need to meet federal government and lender requirements. We will go through all of them below in detail.
Down Payment
While the standard down payment of 20% means you do not need to pay private mortgage insurance, not many Floridians have the cash reserves ready for a down payment that big. On the other hand, if a market is exceptionally competitive, such as North Port in Florida, you may need to provide a higher down payment. In the area, the average down payment is 23.5%, the second-largest down payment by percentage in the US.
Luckily for people with lower savings, some conventional loans require a minimum down payment as low as 3% for buyers with excellent borrower profiles. However, the bigger the down payment, the better, as you it lets you save on PMI and interest rates over the years.
Payment Assistance Programs in Florida
Florida provides a number of conventional loan assistance programs, particularly for first-time homebuyers, active military personnel, and second mortgages. Here are some of the most important loan programs that can help you with down payment and closing fees:
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Florida Assist
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Florida HFA Preferred Mortgages
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3% HFA (Housing Finance Agency)
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Florida Hometown Heroes Housing Program
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3%, 4% and 5% HFA Preferred and HFA Advantage PLUS Second Mortgage
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Florida Homeownership Loan Program
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Good Neighbor Next Door program
Most first-time homeowner programs also have income restrictions that require you to have at least 80% of your area’s median income, and they may have additional requirements such as homeowner education. There are also local assistance programs. To access them, it’s best to contact your mortgage loan officer.
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Private Mortgage Insurance
With a small to considerable increase in the monthly payment, or between 0.5% and 2% of the total loan amount, PMI protects the lender in the event the borrower defaults on the payment. In Florida, PMI is necessary for conventional mortgages with down payments of less than 20%. However, unlike MIP with FHA loans, it is automatically canceled once your home equity reaches around 20%. The PMI percentage will depend on the LTV and credit score.
Interest Rates
Florida fixed-rate mortgages provide consistency in monthly payments by locking in an interest rate for the life of the loan. This makes them perfect for long-term planning in a volatile market. On the other hand, lower starting rates on adjustable-rate mortgages (ARMs) may alter over time. Deciding between the two will be influenced by your risk tolerance, financial stability, and whether you want to move soon or anticipate changes in your income.
Credit Score
In Florida, you must meet a minimum credit score in order to be eligible for a conventional loan, and for most lenders, the requirement is 620. Unfortunately, Floridians have lower credit scores compared to the rest of the country — at 680, it’s ten points lower than the national. Regardless of your current credit score, improving it before starting the loan application process will help you get a better interest rate, and it can decide whether or not you’ll qualify.
Florida Conventional Loan Limits
For single-family homes, the FHFA limit for conventional loans in 2024 is $766,550 in all counties except for Monroe, where the maximum loan is $929,200. The loan limits are set each year based on the market conditions across the country, with higher limits allowed in counties with steeper home prices.
Conforming Loan Versus Non-Conforming Loan
Conforming loans follow the rules set forth by Fannie Mae and Freddie Mac, as well as the lending limitations set by the Federal Housing Finance Agency (FHFA). There are two types of non-conforming loans: government-backed loans and jumbo loans. Any VA, USDA, or FHA loan is supported by its corresponding government agency and is non-conforming. On the other hand, a jumbo loan is non-conforming because it exceeds the maximum loan amount of $766,550, and it also allows for more flexible lending terms.
Closing Costs
In Florida, title insurance, property taxes, and loan origination are just a few of the items that are included in closing costs. These expenses, which normally range from 2% to 5% of the loan amount, may affect how affordable a house purchase is overall. The home loan procedure asks for a careful evaluation of your personal finances in order to plan for closing costs.
Personal Finances
Effective personal money management is essential to getting a conventional loan in Florida. In order to assess your ability to make monthly payments, lenders will carefully review your tax returns and bank statements, as well as calculate your debt-to-income ratio (DTI). The debt-to-income ratio is your total debt divided by your monthly gross income. The usual lender requirement for conventional mortgage loans is a maximum of 43%.
Contact District Lending Today
Are you prepared to start your Florida homebuying journey? As your dependable partner, District Lending provides customized lending options that are suited to your requirements. Our knowledgeable staff is here to help you every step of the way, whether you’re looking to invest or buy a primary residence.
We guarantee a smooth transaction with affordable interest rates, a range of conventional loan options, and a dedication to providing outstanding service. Turn your aspirations of owning a Florida property into reality and contact us for a free quote.
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