Getting a home loan for your new Florida home can seem overwhelming. There are several options for home loans, the application process requires some documentation, and everyone uses industry terms that most people don’t know!
We want to break it all down for you so that you have a solid understanding of the basics. By the time you’re done reading this page, you’ll know exactly what you need to do to get the financing needed to buy your new home.
Main Types of Home Loans in Florida
There are four main types of homes loans used in Florida:
- Conventional loans. This is the most common mortgage type. It requires good credit and a down payment of at least 3% (meaning that you need to pay at least 3% of the total purchase price upfront, then you can get a loan for the rest).
- FHA loans. FHA loans were originally designed for first-time buyers. They are a good option for buyers with lower credit scores (scores under 620). You’ll need a down payment of 3.5%-10%, depending on your credit score.
- VA loans. VA loans are reserved for military service members, veterans, and their spouses. If you qualify, you could get a 0% down payment VA loan with a favorable interest rate!
- USDA loans. USDA loans are for properties located in qualifying rural areas. Metro areas like Tampa are excluded, but for qualifying rural areas, low-to-moderate income buyers can get 0% down payment loans.
If you’re not sure which mortgage type is right for you, you can contact us for a private consultation. We will provide as much assistance as possible, and we can connect you with a reputable lender if you have any questions that we are unable to answer.
Where to Start With Home Loans
The very first thing you need to do is get pre-approved for a home loan. This step should be done even before you start your house hunt!
Getting pre-qualified means that you have a lender review your financials to determine how much you are qualified to borrow. Knowing this number will help you set your budget properly. And, when you find the right house, this pre-approval will make your
offer stronger by assuring sellers that you will be able to get the funding needed to close the deal.
To get pre-qualified, you can visit the website of your chosen mortgage lender. Many lenders even allow you to complete the pre-approval application online for a quick, easy pre-approval!
If you need help finding a lender, simply contact us for a list of reputable lenders.
What Documentation Do I Need for a Home Loan Application in Florida?
In most cases, you’ll need to provide:
- Proof of identity (a driver’s license or passport, for example)
- Proof of income (pay stubs, bank statements, and/or tax returns are common documents for confirming income)
- A current credit report (or authorization for the lender to pull your credit from the reporting bureaus)
What Are Lenders Looking For When They Review Mortgage Applications?
Lenders consider multiple factors when reviewing mortgage applications, including:
- Stable income
- Enough income to comfortably accommodate the new home loan in addition to any other debts you may have (this is called a debt-to-income ratio or DTI)
- A solid history of using debt responsibly (as shown by your credit score)
How Much Do I Need for a Down Payment in Tampa?
The amount you need for a down payment depends on the value of the home you want to purchase, your home loan type, and your credit score.
Buyers with good credit typically need a down payment of around 3-5% of the purchase price. If, for example, you’re looking to buy a home with a purchase price of $500,000, you would likely need a downpayment between $15,000 and $25,000, depending on your credit score.
Buyers with good credit who qualify for a VA loan can potentially get a loan with zero down payment.
How Much Can I Afford to Borrow?
When you get pre-approved with a lender, they will tell you the maximum amount you can borrow. You can use an online mortgage calculator to figure out what your monthly mortgage payment would look like if you borrowed the full amount. But you don’t have to borrow the maximum. Make sure you’re comfortable with the estimated monthly payments, based on your own financial comfort levels.
How Is My Monthly Mortgage Payment Calculated?
In most cases, your mortgage payment is calculated based on four separate expenses:
- Principal - the amount you are repaying on the loan balance.
- Interest - the fee for borrowing money.
- Taxes - property taxes, which your loan servicer will pay on your behalf when they come due.
- Insurance - homeowner’s insurance policy premiums, which your loan servicer will pay on your behalf when they come due.
How Do I Find a Lender in Tampa?
You can search online to find a lender in Tampa. Or you can contact us for a list of reputable lenders.
What If I Don’t Qualify for a Home Loan?
If you don’t qualify for a home loan today, that’s okay. You can find out what you need to do to qualify, and then make it happen! Maybe you need to bring your credit score up a bit. Or establish a bit more employment history to confirm that your income is stable.
If you are concerned that you won’t qualify, or you have confirmed with a lender that you don’t qualify yet, contact us! We’re happy to hold a confidential strategy session with you to help you create a plan to qualify as soon as possible!
