Home Purchase Loans In Palm Bay

In the current market, prospective home buyers in Palm Bay, Florida, may anticipate a moderately competitive atmosphere. The median housing price had a decline of 1.5% in comparison to the preceding year. On average, residential properties in Palm Bay are sold within approximately 70 days from the time they are listed for sale. It is important to acknowledge that these trends have the potential to undergo significant changes; hence, it is advisable to seek guidance from a real estate expert to obtain the most up-to-date information.

Purchase Loan Programs in Palm Bay

Palm Bay residents seeking to purchase homes are presented with various home financing programs contingent upon their circumstances and specific needs. Included in this group are the following:

• FHA Home Loans

The FHA home loan program in Palm Bay, Florida, is a mortgage initiative supported by the government, aiming to facilitate homeownership for those with low credit ratings and limited funds for down payments. The Federal Housing Administration (FHA) does not directly provide loans but functions as an insurer, incentivizing lenders to extend credit to borrowers who do not fit the criteria for conventional mortgages. One main benefit of an FHA loan is its low down payment requirement, typically as low as 3.5%. This feature substantially reduces the initial expenses for the purchaser.

An FHA loan often requires a smaller down payment and less of a credit score than a conventional mortgage. FHA loans may become more costly throughout the loan due to the upfront and yearly mortgage insurance fees that must be paid. Conversely, conventional mortgages have more stringent terms and conditions and may not require mortgage insurance if the borrower makes a 20% down payment or more.

The qualifications for an FHA loan in Palm Bay are similar to those in other parts of the country. Applicants must have a credit score of at least 580 for a 3.5% down payment and 500 for a 10% down payment. They must also have a consistent employment history, and the property they purchase must be their principal residence. Furthermore, the loan amount must be under the FHA lending restrictions for Brevard County, which includes Palm Bay.

The 2023 FHA loan limits in Palm Bay, Brevard County, are $472,030 for a single-family residence, $604,400 for a duplex, $730,525 for a triplex, and $907,900 for a quadplex.

• Conventional Conforming Loans

A conventional home loan in Palm Bay, Florida, refers to a mortgage that lacks insurance or guarantee from a government body. However, the program is supported by private lenders and follows the criteria established by Fannie Mae and Freddie Mac, two government-sponsored enterprises. Conventional loans provide borrowers with a diverse range of term lengths and the option to choose between fixed-rate or adjustable-rate mortgages. Government-backed loans, like FHA loans, typically impose less stringent credit score and debt-to-income ratio standards and necessitate a smaller down payment than these loans.

Conventional mortgages in Palm Bay can be broken down into two major groups: conforming and non-conforming loans. Conforming loans follow the rules and limits Fannie Mae and Freddie Mac set for loans. Non-conforming loans, on the other hand, go over these limits or don’t meet other standards. Non-conforming loans are usually used for high-end homes or properties in highly competitive areas. Because lenders are taking on more risk, the interest rates may be higher.

The 2023 conforming loan limits in Palm Bay, Brevard County, are $726,200 for a one-unit home, $929,850 for a duplex, $1,123,900 for a triplex, and $1,396,800 for a quadplex.

• VA Home Loans

The VA home loan program in Palm Bay, Florida, is specifically tailored to provide financial assistance to veterans, active-duty military members, and qualifying surviving spouses who wish to acquire a residential property. In contrast to conventional or FHA loans, VA loans are supported by the U.S. Department of Veterans Affairs, enabling lenders to provide more advantageous terms. One of the key features of a VA loan is its capacity to facilitate the acquisition of a residential property without requiring any down payment. Additionally, it is noteworthy that VA loans do not impose any requirement for private mortgage insurance (PMI).

VA loans in Palm Bay have several benefits over traditional mortgages. Among these are reduced interest rates, no need for a down payment, and no PMI. Regarding credit score requirements, VA loans are usually more relaxed. For veterans, a VA funding fee varies depending on the down payment and the type of veteran. When you get a conventional loan, you usually need a down payment of at least 5% to 20%. If the down payment is less than 20%, you may also need PMI. Also, they generally have stricter rules about credit and income.

The requirements for getting a VA home loan in Palm Bay are the same as those of the Department of Veterans Affairs. Those who want to apply must have good credit, enough income, and a valid Certificate of Eligibility (COE) that shows they are a veteran or belong to a veteran group. The borrower must also live in the property they are buying, and the loan amount must be at most the VA’s loan limits unless they make a down payment to cover the difference.

• Construction Loans

A construction home loan in Palm Bay, Florida, is a distinct form of mortgage intended to provide financial support for constructing a newly built residence. In contrast to conventional residential mortgages, construction loans are temporary financial arrangements designed to fund the expenses associated with the construction or renovation of a residential property. The lender disburses the construction costs in periodic installments, referred to as “draws,” as the construction of the building advances. After the construction is finished, the borrower can either refinance the construction loan into a permanent mortgage or fully repay it.

There are two main types of construction loans in Palm Bay. These are the one-time close and the two-time close. A two-time close construction loan is made up of two different loans. The first loan pays for the building of the house, and then the borrower needs to get a new loan to pay off the construction loan. This means that there are two closings. This method lets you pick your own fixed mortgage terms, but it also puts the borrower at risk of interest rates changing and additional closing costs. But a one-time close construction loan combines the construction loan and the permanent mortgage into one loan that is closed all at once. This makes things easier and locks in the interest rate before the completion of the home construction. 

• Jumbo Loans

In Palm Bay, Florida, a jumbo home loan is a mortgage larger than the Federal Housing Finance Agency (FHFA) limitations for loans that Fannie Mae or Freddie Mac will buy. These limits are different for each county and are changed every year. With a jumbo loan, you can buy a house that costs more than what a conventional loan will cover. Because jumbo loans are for more significant amounts, lenders see them as riskier. Because of this, they have stricter requirements for who can get them, like needing a better credit score, less debt-to-income ratios, and more significant down payments.

A jumbo loan is different from a conventional loan in that it can be used to finance more expensive homes. However, the interest rate is usually higher because the lender takes on more risk. Regarding conventional loans, the down payment can be anywhere from 5% to 20%. If the down payment is less than 20%, you must carry private mortgage insurance (PMI), but with jumbo loans, you usually need a down payment of at least 20% and can’t get PMI. Additionally, conventional loans follow the rules and loan limits set by Fannie Mae and Freddie Mac, but jumbo loans don’t because they are too big for these government-backed enterprises to buy. So, the lender who gave them to you holds on to them or sells them to other investors.

• Non-Qualified Mortgage Loans

In Palm Bay, Florida, a mortgage that does not comply with the Consumer Financial Protection Bureau’s (CFPB) qualified mortgage rules is referred to as a non-qualified mortgage, or non-QM, loan. A mortgage is considered qualifying if it meets specific requirements, like having a loan duration of no more than 30 years, a debt-to-income ratio of no more than 43%, and no risky lending features like interest-only periods. Non-QM loans, conversely, do not adhere to these criteria, making them appropriate for borrowers with unusual sources of income, higher debt-to-income ratios, or looking for special loan features.

Non-QM loans give you more loan choices than conventional loans, but they usually cost more and come with higher risks for the borrower. Conventional loans typically follow the rules Fannie Mae and Freddie Mac set, and they usually have lower fees and interest rates. They are less risky, and their rules are straightforward. On the other hand, Non-QM loans can be structured differently and usually have higher interest rates to make up for the investor taking on more risk. Underwriting standards for these loans may be less strict, but the borrower’s ability to pay must be examined more closely. People who are self-employed, real estate investors, or have special financial situations may benefit from the flexibility of non-QM loans, even though they cost more than conventional loans.

Apply for a Home Purchase Loan in Palm Bay

Capital Home Mortgage Palm Bay offers a wide range of mortgage solutions to diverse needs, serving as a prominent Florida-based lender and servicer. Our team of mortgage experts possesses extensive knowledge and expertise in the field, enabling us to assist you in selecting the most suitable loan program that aligns with your financial constraints and specific requirements. Given the inherent uniqueness of each loan, our loan officers provide a range of tools, support, and adaptability to empower consumers in selecting the most suitable mortgage package. 

Call (561) 245-5434 to speak with a Palm Bay Home Loan Specialist.