In recent years, a number of alternative home mortgage options have risen to allow Ocala and Gainesville homebuyers to purchase a home with little to NO down payment. Conventional mortgages have always required a 10-20 percent down payment, which is out of reach for the average home buyer, especially first time buyers. Some other options in 2015 allow buyers to purchase a home up to 100% financing. Federal Housing Administration (FHA) and U.S. Department of Agriculture (USDA) loans are very popular choices and we will take a closer look at them below. While the average borrower may be aware of these types of mortgages, he or she may not understand the difference. Each variation carries its own specific set of criteria that may or may not suit the borrower's needs.
Ocala - Gainesville Conventional Mortgage:
A conventional home loan is among the most common type of mortgage. Loan providers require the buyer to put down 10-20% of the purchase price. The buyer needs to qualify within the lender's debt-to-income ratio. The ratio for home expenditures - home loan and escrow- is no more than 28 % of the buyer's gross monthly earnings. The ratio for general debt is no more than 36 % of the buyer's gross monthly earnings. The buyer must present evidence they have money available for the down payment. Please do note the ratio limits above can be exceeded for strong buyers that have good credit, stable job history, cash savings. Generally, credit score should be a min of 620. Learn more at http://www.fivestarsmortgage.com/florida-loan-programs/conventional-loan
Ocala - Gainesville FHA Mortgage:
An Federal Housing Administration (FHA) loan is sponsored by the U.S. Department of Housing and Urban Development. The buyer only has to put 3.5 % down payment with the FHA program. The credit score and underwriting guidelines are less firm than those for a conventional loan. The buyer can put down as little as 3.5% down payment, however, he must pay monthly private mortgage insurance. This yearly premium is typically 1.35% of the loan amount. Payments are broken up over a 12-month period. In addition, FHA loans require a 1.75% upfront funding fee that is normally added to the buyers loan. FHA loans are only available to those who will occupy the property as a primary residence. Investment home and vacation homes are not permitted. Learn more about the FHA program at http://www.fivestarsmortgage.com/florida-fha-loan
Ocala – Gainesville USDA Mortgage:
A USDA mortgage is sponsored by the United States Department of Agriculture (USDA Rural Housing) These loans are specifically targeted to more rural areas. Here is the great news… all of Marion County outside of the immediate Ocala area is eligible and approved for 100% financing USDA loans! Belleview, Citra, Dunnellon, Eastlake Weir, Eureka, Fort McCoy, McIntosh, parts of Ocala, Ocklawaha, Orange Springs, Pedro, Reddick, Romeo, Salt Springs, Summerfield, Weirsdale – all approved. Same goes for Alachua Countyoutside of the immediate area of Gainesville - Alachua, Archer, parts of Gainesville, Hawthorne, High Springs, La Crosse, Micanopy, Newberry, Waldo – all approved!
The USDA 502 program allows up to 100% of the appraised value of the home with no down payment required. Another advantage with USDA loans, the monthly mortgage insurance is much less than FHA home loans. One thing important to remember is the USDA program does have household income limits – read here to for info -http://www.fivestarsmortgage.com/usda-rural-loan
Pro and Cons:
A conventional mortgage is favorable in that a borrower starts out with at least 20% down payment and can avoid private mortgage insurance (PMI) The downside is that saving that enough for so large a down payment can take a considerable amount of time. FHA loans give you the flexibility to purchase a home with less money down. There are also no income or location restrictions with FHA. The disadvantage is that you can be stuck with PMI for half the term of the loan. USDA loans have the least rigid guidelines, but you must be looking for a rural home specifically and have household income below the limit for Marion and Alachua County. USDA is also the only loan that permits 100% financing.
If you have questions about any of the mortgage programs mentioned above, please contact us at 800-871-2636 or visit www.FiveStarsMortgage.com