In this post we will highlight some important things to insure you have success when applying for a government home loan. All the government loan programs - FHA, VA and USDA offer advantages for home buyers. The most important advantage is they still allow Florida home buyers to purchase a home with little or no down payment. Florida first time home buyers will find the information below especially useful. It's good to know what you need do before applying for a home loan, as well as the process after you sign a contract to purchase a home.
Before you submit your application:
- What loan program is right for you? Of course your loan advisor can talk to you about the pro's and con's with each and assist you with making the best choice. The FHA mortgage is widely available through Fla and requires a 3.5 percent down payment. The USDA Rural Housing loan is 100 percent financing, but this program is only available in certain designated rural locations. Read all the USDA FAQ's here. The VA mortgage is also 100 percent financing, but only available to military.
- How much current debt?
Lenders and banks can vary on exact debt to income ratio limits, but a debt load that’s higher than 45 percent of your gross monthly income can be considered risky for a VA or . For USDA this number is 42 percent. This includes all your monthly payments (reporting on your credit report) plus your new housing expense ( with taxes and home insurance)
- Credit check
Have and idea of your current credit profile. Check your income, credit, as well as rent history that might show up on a credit report. Get and idea of credit score in advance - any recent late payment, collections, etc? A credit score of 620 or better is normally needed for the 3.5% down payment FHA and 100% USDA loan. The VA mortgage program will permit credit scores even lower. If you recently came out of a bankruptcy or foreclosure, you would need to have maintained a perfect credit profile for 3 years since the BK discharge, and up to 5 years for a foreclosure or short sale.
During the application the lender will ask basic questions, most you will already know the answer to. Two years of employment history, living history, banking information, etc. These things along with credit will determine if you are eligible and pre approved for a loan. The interest rate and the terms of the loan will also be determined largely by your credit score. The loan application can often be done in under 20 min over the phone.
- In the event the application is preapproved, you will get the disclosure documents which are essentially initial loan documents that have all the details regarding the terms, interest rates, cost and payments of the loan.
- This has to be signed and returned along with other documents such as your bank statements, IDs, references, etc., for verification purposes. Usually these documents are prepped and readied well before the loan application is submitted to the lender.
- The processor reviews all verifying documents and requests for missing or any additional documents from the borrower if need be.
- Once you are under contract to purchase a home, the loan appraisal and home inspection will be complete. Your lender and realtor will work together to schedule the inspections needed.
- A complete loan package with all the documents is then submitted to the underwriter. The underwriter will send a loan conditions list of additional missing items or documents needed from the buyer.
- Once the buyer completes the needed items on the list, it’s sent back to the lender for final approval. A closing date is then set.
The entire loan process to close takes about 25-30 for FHA and VA loans. USDA loans take a bit longer because these loans go through a two step approval process - first with the USDA approved lender (bank or broker) and finally by the USDA. It's a good idea to allocate 45 days for closing on USDA mortgages.
Florida home buyers can contact us below to learn more about any the government loan programs and how to apply.
We are happy to assist all Florida home buyers:
Alachua County – Gainesville, Baker County – Macclenny, Bay County - Panama City, Bradford County – Starke, Brevard County – Titusville, Broward County - Fort Lauderdale, Calhoun County – Blountstown, Charlotte County - Punta Gorda, Citrus County – Inverness, Clay County - Green Cove Springs, Collier County – Naples, Columbia County - Lake City, De Soto County – Arcadia, Dixie County - Cross City, Duval County – Jacksonville, Escambia County – Pensacola, Flagler County – Bunnell, Franklin County – Apalachicola, Gadsden County – Quincy, Gilchrist County – Trenton, Glades County - Moore Haven, Gulf County - Port St. Joe, Hamilton County – Jasper, Hardee County – Wauchula, Hendry County – LaBelle, Hernando County – Brooksville, Highlands County – Sebring, Hillsborough County – Tampa, Holmes County – Bonifay, Indian River County - Vero Beach, Jackson County – Marianna, Jefferson County – Monticello, Lafayette County – Mayo, Lake County – Tavares, Lee County - Fort Myers, Leon County – Tallahassee, Levy County – Bronson, Liberty County – Bristol, Madison County – Madison, Manatee County – Bradenton, Marion County – Ocala, Martin County – Stuart, Miami-Dade County – Miami, Monroe County - Key West, Nassau County - Fernandina Beach, Okaloosa County – Crestview, Okeechobee County – Okeechobee, Orange County – Orlando, Osceola County – Kissimmee, Palm Beach County - West Palm Beach, Pasco County - Dade City, Pinellas County – Clearwater, Polk County – Bartow, Putnam County – Palatka, Santa Rosa County – Milton, Sarasota County – Sarasota, Seminole County – Sanford, St. Johns County - St. Augustine, St. Lucie County - Fort Pierce, Sumter County – Bushnell, Suwannee County - Live Oak, Taylor County – Perry, Union County - Lake Butler, Volusia County – DeLand, Wakulla County – Crawfordville, Walton County - De Funiak Springs, Washington County Fla