5 Loan Products For Buying a House in Florida

Florida offers an appealing combination of nice weather, low taxes, and high-quality amenities, making the Sunshine State an attractive option for homebuyers. While many states are seeing more residents moving out, Florida continues to welcome more buyers every year.
Many local markets are highly competitive if you plan to buy a residential property in Florida. Housing prices are high, especially in urban areas like Miami, Orlando, and Jacksonville. However, with the right loan product, home affordability will not be an obstacle to buying property.
Choosing the right home loan product is the key to purchasing a home with affordable mortgage payments and upfront costs. Let’s discuss loan programs you can use to buy a house in Florida. One popular loan program for buying a home in Florida is the Federal Housing Administration (FHA) loan, which offers low down payment options for first-time homebuyers. Another option is the Veterans Affairs (VA) loan, which is available to qualified military members and their families. For those looking to make a Florida real estate investment, there are also specialized loan programs available for real estate investors, such as conventional loans or portfolio loans designed for purchasing investment properties in the state.
Conventional Loan
The most basic and popular type of home loan is a conventional mortgage. Many private lenders and banks offer conventional mortgages to help a buyer afford the purchase price of a home. In return for the loan, the borrower pays back the principal amount plus interest throughout the loan. Any government entity does not back a conventional loan. The two real estate entities, Fannie Mae and Freddie Mac, often purchase these loans in the secondary loan market. Qualifying for a conventional loan usually requires a credit score of 620 or more and a down payment minimum of 3%. Generally, a conventional loan down payment goal should be 20% to avoid mortgage insurance premiums.
FHA Loan
FHA stands for the Federal Housing Administration. This is a branch of the federal government under the umbrella of the Department of Housing and Urban Development. An FHA loan is a type of government-backed mortgage that is offered to borrowers with lower income scores and limited income. The FHA provides backing for these loans so approved lenders can relax their loan approval restrictions. As a result, you can still apply for an FHA loan even if you don’t qualify for a conventional mortgage. There are limits on FHA loans, so you are unlikely to be granted one if you plan to move to Florida’s richest neighborhoods. The goal of these products is to make homeownership accessible for more borrowers.
USDA Loan
The US Department of Agriculture supports a similar loan program to the FHA mortgage initiative. However, homes purchased with USDA loans are usually restricted to rural zones. As such, you cannot use a USDA loan to buy a house in a city or suburb in most cases, even if you meet all the income, credit score, debt-to-income ratio, and other borrower requirements. This loan option is designed to help lower-income families afford homes in rural areas without taking on too much debt. To qualify, your income must not exceed 115% of the median income for the county, and you must have a credit score of 640.
VA Loan
VA loans are reserved for veterans, active-duty service members, and surviving spouses. Backed by the Department of Veterans Affairs, these mortgages have no down payment requirement, lower interest rates, no mortgage insurance premiums, and fewer closing costs. This loan program helps families who have been connected to the military buy homes with fewer upfront costs. The ongoing mortgage payments are also lowered because of the reduced interest rates. There are restrictions on who can use a VA loan to buy a home related to the type and duration of military service. You can also acquire a VA construction loan in Florida to build a new home or rental property that you will occupy.
Jumbo Loan
Some buyers plan to spend more money on homes than the secondary mortgage market is comfortable with. Fannie Mae and Freddie Mac set limits on conventional loans that these entities are willing to purchase. Any mortgage amount above this limit is considered a jumbo loan. You can learn how to use jumbo loans in Florida to buy properties that are more expensive than those limits. Typically, lenders have much higher standards for approving jumbo loans. You may need a credit score of at least 700 even to be considered, as well as a low debt-to-income ratio and a large down payment. The better your financial standing, the more likely you will be approved for a jumbo loan.

Find a Home Loan That Suits Your Needs
A positive home-buying experience is easier with the right loan program. An FHA loan may be your best option if you have a lower credit score. If the home you are buying is in a designated rural zone and your income is limited, then USDA loans are a better fit. When purchasing a more expensive house beyond the limits set by Fannie Mae and Freddie Mac, a jumbo loan is likely your only option. Find the right loan product for your new property goals and choose a lender to provide that option.