Home Purchase Loans In Hollywood, Florida

Home buyers in Hollywood, Florida, should expect a balanced market today, with home prices up 16.5% over last year. Homes in Hollywood sell after 58 days on the market on average. However, the number of residences sold has declined from the previous year. 

Home Purchase Loan Options in Hollywood

Multiple financing choices are accessible to prospective home buyers in Hollywood, Florida. Several frequently utilized mortgage lending programs include the following:

• FHA Home Loans

In Hollywood, Florida, an FHA home loan is a form of mortgage insured by the Federal Housing Administration under the authority of the United States Department of Housing and Urban Development (HUD). These government-backed loans are intended to assist borrowers who don’t meet standard lending criteria by providing more flexible borrowing options. The primary purpose is to make homeownership more available to broader consumers, including individuals with marginal credit or limited financial resources.

The primary distinctions between FHA and conventional loans are in the eligibility criteria and loan terms. FHA loans often require a lower credit score and may allow for higher debt-to-income ratios. Conversely, conventional loans often call for higher credit scores and down payments but do not require mortgage insurance if the borrower puts down 20% or more.

FHA loans in Hollywood often require a minimum credit score of 580 and a down payment as low as 3.5%. Borrowers must also pay mortgage insurance premiums. Conversely, conventional loans typically require a credit score of at least 620 and a 5% down payment. However, highly qualified buyers can get by with a 3% down payment. 

The 2023 FHA loan limits in Hollywood, Broward County, are $557,750 for a single-family residence, $714,000 for a duplex, $863,100 for a triplex, and $1,072,600 for a quadplex.

• VA Home Loans

A VA home loan in Hollywood, Florida, is a mortgage loan program designed to help veterans, active-duty military personnel, and some National Guard and Reserves members purchase a home. This loan program is supported by the United States Department of Veterans Affairs, which guarantees the lender, lowering the risk of lending. The VA loan program is designed to provide various benefits to qualified borrowers, making homeownership more accessible to people who have served or are currently serving in the military.

The government guarantee that VA loans come with is the primary distinction between them and conventional loans. Since the government does not guarantee conventional loans, qualifying sometimes involves larger down payments and higher credit ratings. Additionally, private mortgage insurance (PMI) is typically required for borrowers of conventional loans if the down payment is less than 20%. In contrast, VA loans do not require PMI for any level of down payment. Two significant financial advantages of VA loans are the lack of PMI and the possibility of a smaller down payment.

There are no down payment requirements, private mortgage insurance, and potentially lower interest rates with a VA home loan in Hollywood, Florida. To be eligible for a VA loan, the borrower must have served a minimum period of active-duty service, with the length of service varying depending on numerous factors, including the period of service. Furthermore, the borrower must have been dismissed under non-dishonorable conditions and meet the lender’s credit and income requirements.

• Conventional – Conforming Loans

A conventional home loan in the Hollywood, Florida, real estate market is a mortgage received from a private lender without the backing of a government agency. These loans are popular among homebuyers and can be used to purchase a primary residence, a secondary residence, or even an investment property.

Conventional loans could either be conforming or non-conforming. The difference between a conventional conforming loan and a non-conforming loan is whether the loan meets the requirements of government-sponsored enterprises such as Fannie Mae and Freddie Mac. Conventional conforming loans meet these criteria and, as a result, frequently have lower interest rates and better terms. Non-conforming loans, such as jumbo loans, fall short of these criteria and are commonly associated with higher interest rates.

A conventional conforming loan requires a solid credit score of 620, stable income, and a down payment that can range from 3 – 5% depending on the loan but is typically about 20%. Borrowers may also be required to achieve specific debt-to-income ratios and present sufficient documentation to demonstrate their financial position.

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

• Rural Development Loans

A USDA loan, also known as a Rural Development Home Loan, is a mortgage program supported by the United States Department of Agriculture that assists low- and very-low-income applicants in securing good, safe, and sanitary housing, particularly in qualifying rural areas. The program’s goal is to provide financial help to increase housing affordability. While Hollywood, Florida, is not considered a rural location, certain areas on the outskirts may be eligible for a USDA home loan.

USDA home loans are classified into two types: direct and guaranteed. The key distinction between these is who lends the money. The USDA lends funds directly in a USDA Direct Loan. On the other hand, a USDA Guaranteed Loan involves a third-party lender, and the USDA guarantees the loan against default. Both types serve the same goal but appeal to candidates with different financial backgrounds.

USDA home loans have zero or low down payment requirements and flexible credit standards. These loans are especially advantageous for those unable to obtain conventional financing due to a low income or less-than-perfect credit. Eligibility criteria for a USDA house loan in possibly eligible communities near Hollywood, Florida, would be similar to those in other places, focusing on income levels, the location of the property, and the borrower’s creditworthiness. Applicants must generally meet specific income requirements, and the home must be their principal residence. The property must also meet specific safety and sanitary criteria.

• Construction Loans

A construction home loan in Hollywood, Florida, is a short-term financing option that covers the expenditures of building or renovating a home. Construction loans, as opposed to standard mortgages, which finance the purchase of an already-built home, are intended to support both the construction phase and the finished property. These loans are typically secured from financial institutions and disbursed in stages per significant milestones in the construction process.

Construction-to-permanent loans and standard two-time close construction loans are two significant differences in construction home loans. A construction-to-permanent loan combines the construction and permanent mortgages into a single loan. After construction, the loan immediately converts into a permanent mortgage, saving the borrower the headache of two separate closings. On the other hand, a typical two-time close construction loan requires borrowers to take a different mortgage upon completion of construction, necessitating a new set of loan approval procedures and closing charges.

One-time close construction home loans in Hollywood, Florida, provide various features and benefits. These loans simplify financing by integrating construction and mortgage funding into a single transaction. This method simplifies the borrowing process and may cut closing costs. Furthermore, borrowers can lock interest rates immediately, providing insurance against rate volatility during construction. Eligibility requirements for one-time close construction house loans often include a minimum credit score, a fixed debt-to-income ratio, and, in some instances, a down payment. However, details vary by lender and location.

• Non-Qualified Mortgage Loans

A non-qualified mortgage (non-QM) loan is a category of mortgage that fails to satisfy the stringent eligibility requirements established by the federal government. Non-QM loans, as opposed to conventional loans that conform to criteria established by government-sponsored enterprises such as Fannie Mae or Freddie Mac, provide an element of adaptability, specifically regarding debt-to-income ratios and creditworthiness. These loans offer an alternative in the Hollywood, Florida, real estate market to applicants who fail to satisfy the rigorous criteria for conventional loans.

The fundamental distinction between a conventional loan and a non-QM loan is in the qualification criteria. Conventional loans often require better credit scores and a stable earning history. They are frequently less forgiving of financial challenges like bankruptcy or significant debt. On the other hand, non-QM loans in Hollywood, Florida, are more tolerant of such financial issues, offering potential homeowners an alternative path to owning a home.

Non-QM loans in Hollywood, Florida, may offer smaller down payments and a more forgiving perspective on credit history regarding features, benefits, and eligibility requirements. However, these loans frequently have higher interest rates to compensate for the additional risk lenders carry. Eligibility requirements are less severe, allowing for a broader range of financial situations such as self-employment, recent credit events like bankruptcy, or larger debt-to-income ratios. Before taking out this loan, borrowers must carefully assess the pros and cons, ideally after consulting a home loan expert.

• Jumbo Home Loans

When buying real estate in Hollywood, Florida, a jumbo home loan is a mortgage that exceeds the limits set by federal agencies for conforming loans. These loans are made to pay for high-end properties and homes in expensive places. They let people buy homes that are too expensive to afford with a regular loan. Jumbo loans are not backed by government-sponsored companies like traditional mortgages are. Because of this, they have different requirements for who can get them and usually have higher interest rates.

The main difference between a jumbo loan and a conventional loan is the size of the loan and the rules for approval. Conventional loans limit how much they can be, which changes from place to place. On the other hand, Jumbo loans exceed these limits, making it easier to buy more expensive homes. Also, because the government doesn’t back jumbo loans, they usually need higher credit scores, lower debt-to-income ratios, and more significant down payments than conventional loans.

Apply for a Home Purchase Loan in Hollywood

Before selecting the best home loan, one must examine one’s financial situation and long-term goals, as each type of loan has distinct advantages and disadvantages. Seeking advice from a mortgage professional is highly recommended when navigating the mortgage process and arriving at the best solution for one’s situation.

Call (754) 529-0071 to speak with a Hollywood Home Loan Specialist.