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FAQs: Florida FHA Loan Requirements For 2019

FAQs: Florida FHA Loan Requirements for 2019

Must Reads: First-Time Buyers

Basic FHA Requirements

What is the maximum FHA loan amount for 2019?

Maximum loan amount vary by county for traditional FHA loans. The current base FHA loan limit in most of Florida counties for a one-family home is set at $314,827.00. For county specific limits, view HUD FHA Mortgage Limits.

What is the minimum down payment for FHA loan?

The borrower's minimum required investment is 3.5% of the purchase price / adjusted value of the property. The source must be from borrower's own funds or as a gift from an acceptable donor.

What are FHA guidelines for Employment history and loan income requirements?

A two-year employment and income history is required for both employees and self-employed borrowers by way of pay stubs, tax returns and W2s or 1099s.

Borrowers with court ordered alimony and child support must document receipt of the income for a minimum of three (3) months and proof that it will continue for at least three (3) years.

What is the minimum credit score required for FHA loans and first time home buyers?

A tri-merged credit report is required with a middle credit score of at least 620. Depending on overall credit, sometimes borrowers may qualify with middle scores as low as 580.

In some instances, where a co-borrower does not have any credit scores, FHA will consider approval so long as the primary borrower meets the minimum credit score requirements and has more than 50% of the qualifying income with a minimum of 3 tradelines active for last 24 months.

Regardless of credit scores, FHA still evaluates overall credit history to determine if borrower gets approved eligible findings that meet FHA approval guidelines.

What is the maximum seller contributions/concessions for FHA loans?

Seller and other third party contributions are limited to 6% of the sales price.

FHA Credit & Debt Requirements

What is the FHA waiting period for borrowers with previous bankruptcy?

Bankruptcy does not automatically disqualify a borrower from obtaining an FHA loan.  Minimum 2 years since discharge of chapter 7 bankruptcy.  Borrower with less than 2 years’ discharge may qualify for financing so long as they meet the extenuating circumstances as defined by FHA/HUD.  Same rule applies for borrower with chapter 13 bankruptcy.

However, borrower with chapter 13 bankruptcy may still qualify if the bankruptcy has been discharged less than 2 years if the lender is willing to do a manual underwrite with satisfactory payment history under the chapter 13 plan.

How does FHA treat charge-offs for credit card and installment loan?

Charge-off accounts are not included in borrowers' debt.

How does FHA treat collection accounts for credit card and installment loan?

For non-medical collection accounts when the cumulative outstanding balance is greater than $2,000 borrower may either pay-off the balance or, for the purpose of debt-to-income ratio (DTI), provide proof of a payment plan. If neither are an option, the lender must use 5% of the outstanding balance and include it in the borrower's DTI calculation.

What about borrowers applying for FHA loans that are currently in consumer credit counseling?

If the file receives automated Approve/Eligible findings then no documentation is required from the borrower.

Can I still qualify for an FHA loans if I have delinquent child support?

Delinquent child support must be paid current or in a payment plan.

What are the FHA guidelines for delinquent federal tax debt?

Borrowers with delinquent tax debt are ineligible unless currently in payment plan.

Can you get an FHA loan if you have a tax lien?

Borrowers with delinquent tax debt are ineligible unless currently in repayment plan. Repayment plan tax liens are not required to be paid in full if documentation is provided indicating the borrower is in a valid payment plan.

The following is required:

  1. The borrower must have made a minimum of 3 months of scheduled payments and documentation of the payments is required.
  2. The payment must be included in the DTI calculation.
  3. The borrower cannot prepay the payments to meet the 3-month payment requirement NOTE: Borrowers with delinquent taxes may or may not have a tax lien. Borrowers currently in a repayment plan, and the IRS has not filed a tax lien, are not required to meet the minimum 3-month payment requirement. The payment to the IRS will be included in the DTI calculation.

What are the FHA guidelines for borrower with previous foreclosure and deed-in-lieu?

Foreclosure waiting period is measured from the date of title transfer. Three (3) years must have elapsed from the time title transferred. If the foreclosed loan was an FHA loan, the 3-year waiting period is based on the date the FHA claim was paid (e.g. foreclosure 11/12/14, FHA claim dates was 7/12/15, the 3-year waiting period ends 7/13/18).

Borrowers with foreclosure/DIL within 3 years of case number assignment that was due to documented extenuating circumstances may be eligible if the borrower has re-established good credit since the foreclosure. A downgrade to manual underwriting is required. If the foreclosure was included in the bankruptcy, the foreclosure waiting period still applies. HUD treats the foreclosure and BK independently, not as a single event.

What are the FHA guidelines for borrowers with previous short sale and/or pre-foreclosure?

The three-year waiting period from date of title transfer still applies unless they were current at the time on short sale.

What are the FHA guidelines for income and debt ratios (also called DTI or Debt-to-Income ratio)?

Maximum debt-to-income (DTI) ratio varies based on overall credit history and assets.  Typically, the DTI cannot exceed 45% of the borrower's gross income.  However, in some cases borrowers with as high as 54.9% DTI may be eligible and in other cases borrowers may be capped at 43% DTI.

How does FHA treat deferred student loans?

Borrowers with student loans that are in deferment or not fully amortized will be required to calculate 1% of the outstanding balance as minimum monthly payment to be included in their debt-to-income ratio (DTI) calculation.

FHA Property Requirements

What are FHA eligible property types?

  • Single-family residences
  • 2 - 4 unit planned unit development (PUDs)
  • Condominiums (FHA approved projects. Approval must be valid at time of case number assignment)
  • Modular / pre-fabricated properties (single-unit only)
  • Factory built but not built on a permanent chassis; built on-site similar to stick-built homes; permanently affixed to the foundation; must conform to local building codes. Property is legally classified as real property and assumes characteristics of stick-built such as permanent connections to water, electrical and waste disposal systems.
  • Mixed use must conform to residential nature of the neighborhood, and commercial use cannot exceed 25% of the gross living area.

What are FHA ineligible property types?

  • Non FHA approved condominium projects and/or cooperative projects
  • Manufactured/mobile homes. Manufactured housing is defined as any dwelling built on a permanent chassis. Manufactured homes are ineligible even if the towing hitch, wheels and axles have been removed.
  • Condo Hotels, also known as Condotels, which are projects managed or operated as hotel/motel or were hotel/motel conversions
  • Unique properties
  • Farms, orchards, ranches and rural properties exceeding 10 acres
  • Mixed use must conform to residential nature of the neighborhood, and commercial use cannot exceed 25% of the gross living area.
  • Commercial properties
  • Properties located in lava zones 1 and 2

Can you get an FHA loan for a property acquired at auction?

If the subject property is purchased at auction, the buyer’s premium may be included in the calculation of the final sales price, as long as the amount of the buyer’s premium is reasonable and customary for the area.

Didn’t find the answer to your question or feel you have a unique scenario? Ask Shahram, your FHA expert.