Home Purchase Loans In Fort Lauderdale

The Fort Lauderdale housing market is relatively competitive, with homes receiving numerous bids and selling for approximately 4% less than the list price. Homes are selling in an average of 62 days. However, the market is suffering a minor dip compared to last year. This reflects a balanced negotiation environment in which buyers and sellers establish pricing common ground.

Purchase Loan Programs in Fort Lauderdale

Fort Lauderdale home buyers have several options when financing a home purchase. The most prevalent among them are the following:

• Conventional – Conforming Loan

A conventional mortgage, prevalent in Fort Lauderdale, Florida, refers to a residential financing category lacking federal government insurance. Private lenders, including banks, credit unions, and mortgage businesses, provide conventional loans. One reason for their popularity stems from their versatility across various property types and their propensity to offer competitive interest rates. 

Conventional loans can be conforming or non-conforming. A conforming loan is a conventional loan that adheres to the rules established by Fannie Mae and Freddie Mac. The Federal Housing Finance Agency (FHFA) sets loan size limitations yearly. Non-conforming loans, on the other hand, do not fit these criteria and cannot be sold to Fannie Mae or Freddie Mac. Non-conforming loans may include jumbo loans exceeding the conforming loan limit and with unique features.

Obtaining a conforming loan in Fort Lauderdale necessitates satisfying several essential criteria. The minimum required credit score for the borrower is 620. In most cases, the debt-to-income ratio (DTI) should be below 45%. A minimum down payment of 3 to 5 percent is mandatory, and the borrower is expected to have a consistent employment and income history spanning a minimum of two years. Conforming loans offer the potential for reduced upfront fees and interest rates compared to non-conforming loans.

The 2023 conforming loan limits in Fort Lauderdale, Broward County, are $726,200 for a single-family residence, $929,850 for a duplex, $1,123,900 for a triplex, and $1,396,800 for a quadplex.

• FHA Home Loan

A Fort Lauderdale, Florida, FHA mortgage refers to a form of a residential loan underwritten by the Federal Housing Administration (FHA), an agency under the United States Department of Housing and Urban Development (HUD). FHA loans are provided by financial institutions approved by the Federal Housing Administration (FHA), including banks and credit unions. 

The primary distinction between an FHA mortgage and a conventional mortgage pertains to insurance coverage, with FHA loans backed by the government, while conventional loans lack such government insurance. This implies that in the event of a borrower’s failure to repay an FHA loan, the government will assume responsibility for the financial shortfall, therefore mitigating the potential risk for lenders. Consequently, FHA loans generally exhibit more permissive eligibility criteria than conventional loans. For example, some lending institutions permit individuals with weaker credit scores and down payment amounts to access their services.

One must satisfy several essential criteria to qualify for an FHA loan in Fort Lauderdale. A credit score of at least 500 is required of the borrower. With a credit score of 580 or higher, a minimum down payment of 3.5% is possible. With a credit score between 500 and 579, however, a 10% down payment is mandatory. An FHA appraisal is required to ensure the property complies with government health and safety regulations. FHA loans have smaller down payment requirements and are generally simpler to qualify for than conventional loans, which is one of their advantages. Nevertheless, mortgage insurance premiums (MIPs) are required for the life of the loan.

The 2023 FHA loan limits in Fort Lauderdale, Broward County, are $557,750 for a one-unit home, $714,000 for a duplex, $863,100 for a triplex, and $1,072.600 for a quadplex.

• USDA Home Loan

A USDA mortgage, specifically in Fort Lauderdale, Florida, refers to a form of residential financing that receives support from the U.S. Department of Agriculture. The USDA loans are specifically tailored to provide financial support to those with low- and very low-income levels interested in acquiring a residential property within a designated rural or suburban area that meets the required requirements.

USDA mortgages come in two primary forms: USDA Guaranteed Loans and USDA Direct Loans. One fundamental distinction between the two is the source of funding for the loan. The USDA Direct Loan is accessible to low-income borrowers earning 50–80% of the area’s median income and is funded directly by the USDA. The USDA Guaranteed Loan is financed by a private lender but is guaranteed by the USDA to protect these lenders from potential risk. Applicants for USDA Guaranteed Loans are restricted to earning no more than 115% of the area’s median income.

There are several prerequisites to qualify for a USDA Guaranteed home loan in Fort Lauderdale. Applicants must be US citizens or permanent residents with a track record of stable income. A credit score of at least 640 is recommended for expedited processing. The program gives approved lenders a 90% loan note guarantee to reduce the risk of providing 100% loans to eligible rural homebuyers – meaning no money down for those who qualify. USDA Guaranteed Loans offer 100% financing, low interest rates, and reasonable insurance costs.

• VA Home Loan

A VA mortgage in Fort Lauderdale, Florida, is a form of residential loan that receives support from the U.S. Department of Veterans Affairs. VA loans are specifically formulated to support individuals who have served in the military, including veterans, active-duty service members, and their eligible dependents, by facilitating their acquisition of residential properties.

The primary distinction between a VA mortgage and a conventional mortgage is that the government does not insure conventional loans, whereas VA loans do. This means that the government will cover the loss if a borrower defaults on a VA loan, reducing the risk for lenders. Consequently, VA loans generally have more relaxed eligibility criteria than conventional loans. They permit, for example, lower credit scores and down payments.

There are several crucial conditions to qualify for a VA home loan in Fort Lauderdale. The borrower must have completed at least 90 consecutive days of active-duty service (all at once, without a gap in service). The borrower must have been released under terms other than dishonorable and must have served the required period. You must use the property as your primary residence. VA loans offer the advantage of being easier to qualify for than conventional loans and having lower down payment requirements. Borrowers will, however, be charged a VA funding fee ranging from 1.4 to 3.6 percent of the loan amount.

• Construction Loan

A construction home loan in Fort Lauderdale, Florida, refers to a type of mortgage that facilitates the provision of financial resources to construct a new residential property. The financing encompasses the expenses linked to the procurement of land, acquisition of supplies, and employment of personnel required to build the residence.

A construction-to-permanent loan and a regular two-time close construction loan are the two primary categories of construction loans. A two-time close construction loan comprises a short-term loan for the construction phase and a long-term mortgage loan on the completed project. In essence, you are refinancing once the structure is finished and must reapply for approval and pay closing costs. A construction-to-permanent loan, conversely, merges the financing components of a construction loan and a permanent loan into a solitary transaction. To convert the expenses incurred from a standard construction loan into a mortgage, one must apply for an additional permanent loan and reimburse its closing costs.

Numerous crucial prerequisites exist to qualify for a one-time close construction financing in Fort Lauderdale. A credit score of at least 620 is required for the borrower. The program offers funding for land acquisition, home construction, and a permanent mortgage for the completed home – all in a single loan with a single closing date. The most significant advantage of a one-time close Home Construction Loan is that you do not have to go through underwriting twice. The advantages of one-time close construction loans include spending less on closing fees because you only have to pay them once, drawing money as needed, which means you’ll only pay interest on funds used to build the home, and potentially lower interest rates.

• Jumbo Loan

A jumbo home loan in Fort Lauderdale, Florida, refers to a specific kind of mortgage beyond the established lending limits for conventional conforming loans as determined by Fannie Mae and Freddie Mac. Jumbo loans are required when the loan amount surpasses specific restrictions or lending limits established by governmental authorities.

The primary distinction between a jumbo and a conventional loan is using jumbo loans to acquire high-value properties, typically exceeding millions of dollars in price. In contrast, conventional mortgages are somewhat smaller in scale and better suited to accommodate the requirements of the typical homebuyer. To be eligible for a jumbo loan in the Fort Lauderdale area, the applicant must have a minimum credit score of 680. Additionally, such loans typically require more significant down payments.

• Non-Qualified Mortgage Loan

A non-qualified mortgage loan, sometimes referred to as a non-QM loan, is a form of loan product that does not adhere to the lending criteria established by the Consumer Financial Protection Bureau (CFPB). These products are specifically tailored to cater to prospective homeowners who cannot fulfill the rigorous criteria for obtaining a qualifying mortgage.

The primary distinction between a non-QM loan and a conventional loan is that non-QM loans have less stringent lending standards than conventional loans. Conventional loans are more stringent and are only available through private lenders, including banks, credit unions, and mortgage firms. Non-QM loans have different income documentation requirements, no waiting period after bankruptcy, greater debt limits, higher down payment requirements, and higher interest rates. Eligibility requirements may include a credit score of at least 500, evidence of income using bank statements or 1099s, and a 10% to 20% down payment.

Apply for a Fort Lauderdale Home Purchase Loan

Before selecting a home loan, evaluating one’s financial situation and long-term goals is crucial, as each loan variant presents distinct merits and drawbacks. Getting help from a mortgage professional is strongly recommended to navigate the mortgage process effectively and reach an optimal conclusion customized explicitly to one’s circumstances.

Call (239) 310-5599 to speak with a Fort Lauderdale Home Loan Specialist.