FHA loans were developed to help make the dream ownership a reality for those who do not have a lot of money to use towards a down payment. Because these loans are backed and secured by the Federal Housing Administration (a government organization), lenders are able to offer loans with a lower down payment and looser credit requirements.
Home buyers in Naples, Florida can use an FHA loan to buy a home with as little as 3.5% down and can borrow up to $672,750, which is the loan limit for Collier County. FHA loans are perfect for first time home buyers because they don’t require a huge down payment, and are great for those just starting out.
To qualify for an FHA loan, you must have a credit score of at least 560 and be purchasing a primary residence. You cannot use an FHA loan to purchase a second or vacation property in Florida. Because you will be putting 20% down, the loan does carry Mortgage Insurance to help out the lender in the event of a defaulted loan. The insurance will be present for the life of the loan, but there is no prepayment penalty for paying off the loan early!
When choosing whether an FHA loan is right for you, it is important to keep a few things in mind. Closing costs are typically higher for FHA loans vs Conventional loans as part of the costs from the government are passed on to the buyer. There is an upfront Funding fee equal to 1% of the purchase price that will be written into the loan at closing.
There are so many things to consider when choosing the right loan that it can be confusing. Our main priority is to make sure that you understand all of your options and are choosing the one that will benefit you most in the long run. If you are interested in buying a home in Naples with a low down FHA loan, call us now 239-260–1240 or fill out a quick online form to get a free quote!