A conventional loan is a mortgage that is not backed or insured by the government, including all Federal Housing Administration, Department of Veterans Affairs, or Department of Agriculture loan programs. Conventional loans typically have fixed interest rates and terms. Conventional mortgages are ideal for borrowers with good or excellent credit. They are quicker and require less documentation than FHA or VA loans.

An FHA loan means it’s insured by the Federal Housing Administration. The FHA does not lend money. It just backs qualified lenders in case of mortgage default. FHA mortgages have flexible standards that benefit borrowers with lower credit score or refinancers with little equity.

Like FHA loans, the U.S. Department of Veterans Affairs, or VA, does not lend money; it insures qualified lenders. If a borrower defaults on their home loan, then the lender is protected by the VA. Lenders and borrowers must both meet qualifications to be VA eligible. No down payment is required from borrowers buying primary residences. The VA charges an upfront funding fee, which can be rolled into the loan or paid by the seller. It also allows sellers to pay closing costs, but doesn’t require them to. So, the buyer might need money for closing costs.

Conventional Criteria Loan :

  • Primary residence, Second Home, and Investment Property
  • 5% minimum down payment (Primary residence), 3% for first time home buyers with maximum income limitations.
  • 10% minimum down payment on Second Home, 15% minimum down payment on Investment
  • Maximum loan amount of $453,100
  • Minimum credit Score of 620
  • Conventional mortgage guidelines tend to cap debt-to-income ratios around 43 %
  • Monthly Mortgage Insurance is required with down payments of less than 20%
  • Gifts from acceptable sources are allowed, except for Investment transactions
  • Maximum seller concessions towards the buyer’s closing costs and pre-paids: 3% if your loan to value ratio is > 90%, 6% if LTV is between 75.01% and 90%, and 9% if the LTV is less than 75%. A maximum of 2% is allowed on all Investment transactions
  • Appraisal: Good for 120 days
  • Septic and Well Inspection are required if the appraiser notes it on the appraisal
  • Survey: Good for 10 years if no changes were made to the property.
  • Roof: The roof must be considered to be water tight. There is no specific life expectancy required.
  • Termite: Not required unless noted on appraisal – Good for 90 days

FHA Loan criteria :

  • Primary residence only
  • A borrower may only have 1 FHA loan, except in certain circumstances
  • 3.5% Down Payment with minimum score of 580
  • Maximum loan amounts vary by county (Loans up to $343,850 in Duval / Clay / St Johns)
  • Borrowers can spend up to 56 % of their income on monthly debt obligations( mortgage, credit cards, student loans…)
  • Each FHA loan has two mortgage insurance premiums:
    • An upfront premium of 1.75 percent of the loan amount, paid at closing.
    • An annual premium that varies : 0.80% with 5% down for the life of the loan
  • Gifts from acceptable sources are allowed
  • 6% Maximum seller concessions towards the buyer’s closing costs and pre-paids
  • Appraisal: Good for 120 days. A 2nd appraisal may be required and must be paid for by the seller, if the seller has been on title less than 180 days, The Seller must have been on title at least 90 days.
  • Septic Inspection: Required if the appraiser notes it on the appraisal. If public water or sewage is available, it must be connected (if feasible) at a cost of 3% or less of value.
  • Well Inspection: Required if the appraiser notes it on the appraisal, in which case a water test is required. If the local health department has no requirements, we must default to EPA Guidelines and we will always need bacteriological and 5 metal testing.
  • Survey: Good for 10 years if no changes were made to the property. Must show the following: Septic to be 50 feet away from well. Drain-field to be 100 feet away from well. Well to be 10 feet away from the property line.
  • Roof: Remaining life expectance must be 2 years.
  • Termite: Not required unless noted on appraisal – Good for 90 days
  • Refinance: FHA 85% maximum cash out allowed

VA loan criteria

  • Primary residence only
  • 100% financing with purchase prices of up to $453,100
  • Max loan amount of $1 million, with required down payment of 25% of the amount over $453,100
  • Minimum credit Score of 580
  • Veterans do not have to be first-time buyers and may reuse their benefit. An eligible VA borrower may have multiple VA loans, depending on their remaining eligibility.
  • Gifts from acceptable sources are allowed
  • 4% Maximum seller concessions towards the buyer’s closing costs and pre-paids
  • Appraisal: Good for 180 days and stays with property for six 180 days
  • Septic Inspection: Required if the appraiser notes it on the appraisal. If the local municipality requires hook up, it must be connected regardless of the cost.
  • Well Inspection: A water test is required. A letter from the county Health Department stating the water meets the requirements for that local health authority can be accepted. If the local health department has no requirements, we must default to EPA Guidelines = bacteriological and 5 metal testing. (Lead, Nitrate, Nitrite, Ecoli and Coliform)
  • Survey: Good for 10 years if no changes were made to the property.
  • Roof: Remaining life expectancy must be 5 years.
  • Termite: Clear WDO (good for 60 days)
  • Refinance: VA 100% maximum cash out allowed with a 640 credit score

About the author

Marine LAVAUD

Sales associate

Having worked on 3 continents : Europe, Asia and America, with a marketing and real estate background (diploma of expertise in real estate in France and own brokerage agency near Paris), I want to put the skills I acquired during my previous career to the benefit of people, who are looking to buy and sell in St Augustine area. I love this region, where a part of my family moved there 15 years ago. Fluent in French, certified Leading RE relocation specialist, I know by experience, how stressful it can be, when you're looking to buy or sell a house, especially if you don't know the area. I commit myself to provide to the customers who will contact me, an excellent level of service, honesty, availability and to assist them throughout the whole process of buying and/or selling, making it smooth and enjoyable. My goal is to advise wisely sellers and buyers and create happiness in every transaction I do.

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