Thinking about financing a waterfront home? Most home buyers know that waterfront homes are more expensive than regular homes. Not only is the price of the property itself higher, but they usually come with hidden costs like extra maintenance expenses, boat docking fees, and fees for permits.

Despite the high cost, waterfront homes usually make good investments because they appreciate over the long term, and there’s always a high demand for them.

Aside from the high cost, financing a waterfront home isn’t much different from financing other types of homes. In this post, our real estate experts at Your Home Sold Guaranteed Realty - Florida Waterfront will discuss five financing options you can use for waterfront property.

Financing a Waterfront Home: 5 Options

Conventional Mortgage

Conventional loans are the most common mortgage option for home buyers. They’re available as adjustable or fixed-rate options, and you can get them from any type of private lender. This includes banks, credit unions, mortgage brokers, and direct lenders.

Since conventional loans are not backed by a government agency, they come with stricter financial requirements. While these can vary depending on the lender, general requirements include a:

• Credit score of at least 620. Though a higher score can help you get a better interest rate.
• Down payment as low as three percent. However, a higher down payment means a shorter loan term. A larger payment also means you won’t be required to pay for private mortgage insurance.
• Debt-to-income ratio of no more than 43%

FHA Loan

Federal Housing Administration (FHA) loans are backed by the FHA and are a great choice for low-income borrowers or first-time home buyers. They offer more flexible qualifications, like a lower credit score, a higher debt-to-income ratio, and a smaller down payment.

Despite the lower qualifications, FHA loans come with stricter loan limits, which limit how much you can borrow. The exact limit will depend on the location you’re buying the home In addition, FHA borrowers will need to pay for mortgage insurance throughout the life of the loan. Or, if you can afford a down payment of at least ten percent, you only have to pay for mortgage insurance for 11 years.

VA Loan

If you’re a veteran, current service member, or eligible spouse, you’ll be able to get a home loan from the Department of Veterans Affairs. VA loans offer several favorable terms for home buyers. Most notably, there’s no need for a down payment. 

In addition, the VA doesn’t set a minimum credit score to qualify for one of its loans. Instead, credit score requirements will depend on individual lenders, who often have lower qualifications for veterans.

Lenders offer other benefits for veteran home buyers, such as lower interest rates and reduced or eliminated closing costs.

USDA Loan

If you’re purchasing a waterfront home in a rural area, then you may qualify for a home loan through the United States Department of Agriculture. Similar to VA home loans, you’ll be able to benefit from the option of no down payment and low interest rates.

To see if you qualify, you first have to make sure that the town you’re purchasing the home in is eligible. If it is, you’ll then have to make sure you fall within the income limits. Income limits are determined by the county where you’re buying the home. Your household income can’t be more than 115% of the median income in the county.

Jumbo Loan

Conventional loans have limits on how much you can borrow. So if the price of the property is too high and you’re looking to borrow a bit more, the best option is to apply for a jumbo loan.

While you’ll be able to borrow a larger amount, these types of loans come with stricter requirements to protect the lender. This includes higher interest rates and a higher down payment. The credit score requirement for a jumbo loan can vary by lender, but is on the higher end overall. On average, it ranges from 680 to 760.

The debt-to-income ratio requirement is also higher than average, but you may be able to qualify with a lower ratio as long as your down payment and credit score are high.

Work With Us to Buy a Waterfront Home in Florida

If you need help buying a waterfront home in Florida, look no further than Your Home Sold Guaranteed Realty - Florida Waterfront. We specialize in helping buyers find their dream waterfront properties. We’ve worked in the area for years and have developed a wide network of real estate professionals, including lenders, who we regularly recommend to all our clients.

Clients love working with us because of our high-quality customer service, negotiation skills, and industry connections.

We also provide several buyer guarantees to make the home-buying process as risk-free and stress-free as possible. This includes our Buy it Back Guarantee, which allows you to return your new home to us if it doesn’t meet your expectations. 

To learn more about financing a waterfront home or to work with our team, contact us at 407-307-2617 or complete the form on this page.