Purchasing a condo is a bucket list goal for many Americans, but sometimes, the costs that come with this kind of home purchase can make this goal unattainable. That’s where a home loan like an FHA loan can help you.
In this article, we’ll show you how to buy a condo with an FHA loan and the pros and cons of this type of loan.
How Can an FHA Loan Help?
Purchasing a condo with a conventional mortgage often requires a hefty down payment of 20%, whereas the Federal Housing Administration (FHA) is a government-insured loan that requires a very small down payment of 3.5%. This is also a great loan option if you don’t have a very high credit score and are looking for a loan with flexible terms.
Cons of an FHA loan
If you have been approved for an FHA loan, you will need to take out mortgage insurance since you paid a smaller down payment. This insurance can push up your monthly costs, so you need to be aware of that.
Another downside to FHA-approved condos is that there is a limited amount of FHA-approved units in a building or condo association.
So, how do you actually get an FHA loan for your dream condo?
How To Get an FHA Loan for Your Condo?
While FHA loans generally have much more lenient qualifying criteria, there are some requirements you need to meet first.
Find an FHA-approved condo
To qualify for the loan, you need to choose a condo that is FHA-approved. Some condo associations allow FHA loans because they’re attractive to first-time buyers.
You can check whether your dream condo is FHA-approved by checking the list of approved condos and homes on the U.S. Department of Housing and Urban Development’s (HUD) website in your area.
Meet the FHA loan requirements
To qualify for your FHA-approved condo, you will need to meet the following requirements:
- Credit score: Often, you will need a credit score of 500 or higher, depending on the lender’s terms.
- Ability to make the down payment: For applicants with a credit score of 580 and above, this payment will be 3.5%, whereas applicants with a score between 500 and 579 will need to make a 10% down payment.
- Debt-to-income ratio (DTI): Most lenders will require a DTI of less than 43%.
Buy a Condo with a FHA Loan in Florida with Florida State Mortgage Group
Condos are very popular in Florida, and at Florida State Mortgage Group, we are experts in condo loans. We can guide you through the application process for your dream condo. Give us a call at (954) 359-3000 to schedule a consultation.
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