Home Purchase Loans In St. Petersburg

The housing market in St. Petersburg, Florida, exhibits moderate competitiveness. On average, residential properties in St. Petersburg, Florida, attract approximately three offers with a median selling time of roughly 22 days. The St. Petersburg housing market experienced a 14.3% increase in the median sale price of residential properties compared to the previous year. However, there was a decrease of 1.04% in home sales compared to the corresponding time of the last year.

Purchase Loan Programs in St. Petersburg

There are various home loan programs buyers in St. Petersburg can avail of. The most common among them are the following:

• Conventional – Conforming Loans

Conventional conforming loans are mortgages that adhere to the Federal Housing Finance Agency’s (FHFA) terms and conditions and are eligible for purchase by Fannie Mae and Freddie Mac. These loans fall within the loan limits defined annually by the FHFA and other regulatory guidelines in St. Petersburg, Florida.

The 2023 conforming loan limits for St. Petersburg, Pinellas County, are $726,200 for a single-unit home, $929,850 for a duplex, $1,123,900 for a triplex, and $1,396,800 for a quadplex.

The primary characteristics of a conventional conforming loan include a loan-to-value (LTV) ratio typically limited at 95 – 97%, a debt-to-income (DTI) ratio less than 45%, and naturally more competitive interest rates than non-conforming loans. Lenders view these loans as less risky, resulting in usually reduced interest rates for borrowers.

A credit score of at least 620 is normally required to qualify for a conventional conforming loan. The higher the credit score, the more likely the loan terms will be favorable. In addition, applicants must have a DTI ratio below 45% to demonstrate they can manage their debt obligations and the mortgage.

• FHA Home Loans

Federal Housing Administration (FHA) home loans are government-insured mortgages designed to make homeownership accessible to individuals with lower credit scores and smaller down payments. FHA loans are prevalent in St. Petersburg, Florida, due to their less stringent requirements. These loans require a minimum credit score of 500, and consumers with a credit score of 580 or higher may qualify for a loan with a 3.5% down payment.

Compared to conventional loans, FHA loans offer lower down payment options and less stringent credit score requirements. Additionally, they enable borrowers to qualify faster following a bankruptcy or foreclosure. However, FHA loans typically do not require Private Mortgage Insurance (PMI) if the applicant makes a minimum 20% down payment.

In 2023, the FHA loan limits for St. Petersburg are $472,030 for a single-unit home, $604,400 for a duplex, $730,525 for a triplex, and $907,900 for a quadplex.

• VA Home Loans

A VA (Veterans Affairs) home loan is a mortgage only available to active-duty military personnel, veterans, and some eligible spouses. The VA loan program is guaranteed by the federal government in St. Petersburg, Florida, as it is throughout the United States. Because of this backing, financial institutions can provide more attractive terms, such as no down payment and no need for private mortgage insurance (PMI). VA loans also have competitive interest rates, streamlined underwriting procedures, and low closing expenses.

The primary eligibility requirements for a VA loan in St. Petersburg are military service records, with active-duty people being eligible after around six months of service and veterans and National Guard members having different qualifications. You must first get a Certificate of Eligibility (COE) to apply for the loan. Unlike conventional loans, the VA does not specify a minimum credit score, while individual lenders may set their minimum credit score criteria. One of the most noticeable advantages of a VA loan is the possibility of 100% financing, which requires no down payment.

The key difference between VA and regular loans is that the United States Department of Veterans Affairs guarantees VA loans. This backing enables various advantages not often accessible in conventional loans, including no down payment and no PMI requirement. Conversely, the government does not guarantee conventional loans and frequently necessitates a higher credit score, a down payment, and PMI if the down payment is less than 20%. The lack of a down payment and PMI makes VA loans more appealing to qualified applicants.

• USDA Home Loans

USDA (United States Department of Agriculture) home loans are designed to encourage homeownership in rural and certain suburban areas. While most of St. Petersburg, Florida, is urban, some adjacent areas may qualify for USDA loans. The USDA loan program is divided into two primary categories: Direct and Guaranteed. The USDA-Direct Loan is intended for low-income households and is directly funded by the USDA. On the other hand, the USDA-Guaranteed Loan is provided by private lenders but endorsed by the USDA to assist low- to moderate-income families.

The features and benefits of these loans are highly beneficial. USDA-Direct loans provide payment assistance, which can temporarily reduce mortgage payments. USDA-guaranteed loans do not offer payment assistance, but eligibility requirements are typically less stringent. Both loan types offer 100% financing, which requires no down payment, and neither requires private mortgage insurance (PMI). In most cases, eligibility is determined by property location, income restrictions, and creditworthiness.

The primary distinction between USDA-Direct and USDA-Guaranteed loans rests in their respective target populations and lenders. The USDA-Direct loan is for low-income families and is directly funded by the USDA. The USDA-Guaranteed loan is offered by a third-party lender but is guaranteed by the USDA. It is designed for borrowers in a slightly higher income bracket. This guarantee enables private lenders to offer more favorable terms, which may result in a broader selection of loan options and possibly reduced interest rates for the borrower.

• Jumbo Loans

Jumbo home loans, also known as non-conforming loans, are mortgages that exceed the Federal Housing Finance Agency’s (FHFA) loan limits. In St. Petersburg, Florida, as in the rest of the United States, these loans are designed specifically to finance opulent properties and residences in highly competitive local real estate markets. The maximum loan amount varies by county, but jumbo loans generally begin where conforming loan limits conclude. Standard features include variable and fixed-rate options, interest-only payment plans, and the absence of mortgage insurance requirements.

A jumbo loan’s advantages include financing more expensive properties that exceed conforming loan limits, frequently at competitive interest rates. However, these loans have more stringent eligibility requirements. Borrowers typically require a credit score of 700 or higher, a low debt-to-income ratio, and substantial liquid asset reserves. In addition, documentation requirements generally are stricter, requiring proof of income, financial statements, and sometimes a second property appraisal.

The principal distinction between a jumbo and conventional loans is the loan amount and eligibility requirements. While conventional loans adhere to the standards established by Fannie Mae and Freddie Mac and typically require smaller down payments and more lenient credit standards, jumbo loans exceed these standards. They are, therefore, not backed by these government-sponsored entities. This results in stricter eligibility requirements, enabling debtors to purchase luxury properties that exceed conventional loan limits.

• Construction Loans

A St. Petersburg, Florida, construction home loan is a specialized financial product designed to fund the construction of a new home or significant repairs to an existing property. Unlike regular mortgage loans, construction loans often involve a draw schedule in which money is disbursed at various stages of the construction process. These loans usually cover the cost of both the land and the construction.

The main distinction between a traditional construction loan and a one-time close construction loan is the number of closings. A standard construction loan necessitates two closings: one during the construction phase and another when converting to a permanent mortgage. On the other hand, a one-time close construction loan merges these two processes into a single closing, saving time and lowering closing costs.

Interest-only payments during the construction period and the possibility to convert to a fixed- or adjustable-rate mortgage after construction is completed are common elements of a construction-to-permanent loan. The advantages include a one-time closing and possibly decreased closing fees. Eligibility requirements often include a minimum down payment—often between 20% and 30%—as well as credit score requirements and a debt-to-income ratio below a specific threshold.

• Non-Qualified Mortgage Loans

In St. Petersburg, Florida, a non-qualified mortgage loan (non-QM loan) is a financial product that does not adhere to the Consumer Financial Protection Bureau’s (CFPB) rules for Qualified Mortgages (QM). In contrast to conventional loans, which generally adhere to Fannie Mae and Freddie Mac’s guidelines, non-QM loans offer greater flexibility at the expense of higher risk. Non-QM loans typically include interest-only payments, terms longer than 30 years, and higher debt-to-income ratios.

The primary advantage of non-QM loans is that they provide financing alternatives to borrowers who need to satisfy the stringent requirements for conventional or other types of qualified loans. This adaptability makes them appropriate for self-employed people, investors, and those with non-traditional income sources. The eligibility requirements differ greatly based on the lender and the specific non-QM product, but a larger down payment and extensive documentation of income and assets are typically required. In addition, credit score requirements may be less stringent than for conventional loans.

The primary distinction between a non-QM loan and a conventional loan is whether or not they adhere to federal guidelines. Conventional loans generally conform to Fannie Mae and Freddie Mac’s lending standards, which include specified debt-to-income ratios, credit scores, and loan limits. Non-QM loans, in contrast, do not meet these criteria and are not supported by government-sponsored entities. This lack of standardization typically results in higher interest rates and fees for non-QM loans than their conventional counterparts.

Apply for a Home Purchase Loan in St. Petersburg

Capital Home Mortgage Florida can meet every mortgage need as a direct lender and servicer. Our mortgage experts can help you find a lending program that fits your budget and needs. Our loan professionals provide tools, support, and flexibility to help consumers choose the best mortgage package since all loans are unique. 

Call (239) 310-5599 to speak with a St. Petersburg Home Loan Specialist.