Home Loans In St. Petersburg

St. Petersburg is a city in Florida’s Pinellas County. It is the second-largest city in the Tampa Bay Area after Tampa and the fifth-most populous city in Florida. St. Petersburg is located on the Pinellas peninsula between Tampa Bay and the Gulf of Mexico, connected to the northern portion of the Florida mainland. St. Petersburg, Florida, also known as “The Sunshine City,” offers a vibrant blend of tropical weather, arts and culture, shopping, dining, athletics, and outdoor recreation along a breathtaking coastline with some of the nation’s best beaches.

Like many communities in Southwest Florida, St. Petersburg is a highly desirable place to reside. Residents of St. Petersburg report a high quality of life due to an abundance of amenities and pleasant weather. Yet, despite its popularity, St. Petersburg is remarkably affordable, with an overall cost of living score of 98.6, which is lower than the national average of 100. This means that living in St. Petersburg, Florida is within reach for many. The housing and transportation costs in St. Petersburg are lower than the national average. St. Petersburg’s housing costs are 29% less than the national average, adding to the allure of this beautiful beach community.

Home Loan Programs in St. Petersburg

Numerous mortgage financing alternatives are available for homebuyers and those looking to buy a property in St. Petersburg. Conventional loans, FHA loans, VA loans, non-QM loans, and Jumbo mortgages are some of the most frequent mortgage programs.

• Conventional loans:

Conventional loans are mortgage loans not insured or backed by the federal government. They can be either conforming or non-conforming. Borrowers must meet specific requirements established by Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) to qualify for a conventional conforming loan. The basic requirements for conventional conforming loans are as follows:

• Credit score:

A minimum credit score of 620 is required to be eligible for a conventional conforming loan. Some lenders may require a higher score of 640 and up. 

• Down payment:

Conventional loans require a down payment of 5%. Borrowers with impeccable credit may qualify for a 3% down payment. However, to avoid paying private mortgage insurance (PMI), you will need a down payment of at least 20%.

• Debt-to-income ratio (DTI):

A debt-to-income ratio of 45% or less is needed to qualify for a conventional loan.

• Loan limits:

Conforming loans must adhere to the loan limits set by the Federal Housing Finance Agency (FHFA). For 2023, the maximum loan limit in St. Petersburg is $726,200. Any loan greater than that amount must use a jumbo loan.

• Property occupancy:

Conventional loans can be used to finance a primary residence, second home, or investment property.

• Mortgage insurance:

Private Mortgage Insurance (PMI) is required on all conventional loans unless a borrower puts down 20% or more.

• FHA loans:

An FHA home loan is a mortgage insured by the Federal Housing Administration, part of the Department of Housing and Urban Development (HUD). Banks and other FHA-approved lenders offer these loans, and the FHA insures the loan against default, allowing lenders to provide more favorable terms. FHA loans in Florida are designed to help borrowers with lower credit scores and limited down payment funds.

The FHA loan limits for St. Petersburg, Pinellas County are $472,030 for a single-unit property, $604,400 for a duplex, $730,525 for a triplex, and $907,900 for a four-plex, respectively.

To be eligible for an FHA loan, borrowers must meet certain requirements established by the Federal Housing Administration. The main eligibility requirements are as follows:

• Credit score:

Borrowers must have a FICO score of 580 and above to qualify for the low down payment advantage of 3.5%. Those with credit scores between 500 and 579 may still be eligible, but a 10% minimum down payment is required, and certain restrictions may apply.

• Down payment:

Borrowers with credit scores of 580 or above must make a 3.5% down payment. A 10% down payment is required if your credit score is between 500 and 579. The down payment may come as a “gift” from a family member, charitable institution, or employer.

• Loan amount:

Each county has its own FHA loan limit. The FHA loan must be within the FHA’s set limitations, which vary depending on location and property type.

• Debt-to-income ratio:

FHA has a lenient DTI ratio. The DTI ratio must comply with FHA requirements, which generally require that the borrower’s monthly debt obligations, including the mortgage payment, not exceed 45% of gross monthly income. However, a borrower’s DTI ratio could be as high as 50 – 55% with compensating factors.

• Employment and income:

Borrowers must demonstrate stable employment and “effective income.” The FHA mandates that the owner occupy the property. A two-year verified job history is necessary unless a borrower can demonstrate current military service or a recent college graduation.

• Occupancy:

FHA loans are designed for a primary residence. The borrower must occupy the property as their homestead after closing the loan. Second homes and investment properties are not allowed.

• VA loans:

VA home loans are mortgage loans guaranteed by the Department of Veterans Affairs (VA). They offer better terms than conventional loans from private banks, mortgage companies, or credit unions. They are a benefit afforded to active-duty and veteran military service members and some surviving spouses. There are no down payment requirements, competitively low-interest rates, limited closing costs, and no requirement for Private Mortgage Insurance (PMI) with VA home loans.

To be eligible for a VA home loan, you must meet one or more of the following service requirements:

• You served ninety consecutive days of active duty during the conflict.
• You served 181 days of active duty during times of peace.
• You have completed six years of service in the National Guard or Reserves or 90 days (at least 30 consecutive) under Title 32 orders.

In addition to satisfying the service requirements, you must have available VA loan entitlement and use the loan for an eligible purpose, such as purchasing a home. To apply for a VA home loan, you must obtain a Certificate of Eligibility (COE) by submitting VA Form 26-1880 and evidence of military service.

While the VA provides broad guidelines, individual lenders may require you to satisfy credit and income requirements for the desired loan amount.

• Jumbo loans:

Jumbo loans are a form of home financing for amounts that exceed the Federal Housing Finance Agency’s (FHFA) conforming loan limits. Typically, these loans are used to finance properties too costly to qualify for a conforming loan.

Due to the larger loan amounts, the eligibility requirements for jumbo loans are typically stricter than those for conventional mortgages. While specific criteria may vary by lender, the following are typical:

• High credit score:

To qualify for a jumbo loan, borrowers typically need a credit score of 680 to 700. Depending on the property type and the mortgage transaction, certain lenders may require scores of 740 or higher.

• Low debt-to-income ratio:

Applicants for jumbo loans should have a low DTI ratio, showing their capacity to manage monthly debt payments concerning their income. To be approved for a jumbo loan, applicants must have a debt-to-income ratio of less than 43%.

• Large down payment:

Larger down payments are typically required for jumbo loans than for conventional loans, which can range from 10% to 20% or more.

• Sufficient cash reserves:

Borrowers must have sufficient liquid assets to cover several months’ mortgage payments and related costs, including property taxes and insurance. A typical requirement to qualify for a jumbo loan is six to twelve months of cash reserves.

• Strong financial and employment history:

Lenders may seek documentation of a consistent employment history and a solid financial track record. Individuals who have recently become self-employed may be denied a jumbo loan.

Keep in mind that individual lenders may have their own specific requirements for jumbo loans.

• Non-QM loans:

Non-qualified mortgage (non-QM) loans are mortgages that do not meet the Consumer Financial Protection Bureau’s (CFPB) qualification rules. They may include home loans with terms longer than 30 years, home loans with negative amortization, and other unconventional loan structures.

Florida Non-qualified mortgage loans are intended for borrowers who do not fulfill the qualifications for qualified mortgages, with more flexible eligibility restrictions and a wider range of applicants. Non-QM loan eligibility restrictions can be more relaxed than those for qualifying mortgages, making them a viable choice for borrowers with low credit scores, high debt-to-income ratios, or unpredictable income. While specific eligibility requirements may differ depending on the lender, non-QM loans can accommodate a wide range of borrowers, including foreigners, self-employed individuals, medical practitioners, and borrowers with alternative income sources.

However, because of the less stringent requirements and associated risks for lenders, non-QM loans typically have higher interest rates than qualified mortgages.

Apply for a Home Loan in St. Petersburg

Capital Home Mortgage is a direct lender and home loan servicer in St. Petersburg. If you want to buy a house in St. Petersburg, Capital Home Mortgage can help you every step of the way. We have complete control over your file, from application to funding.

To start your homeownership journey, call our St. Petersburg Home Loan Specialists at (239) 310-5599.