Financing, demystified

Tips Preparing for a Mortgage Loan

Eight loan types, one clear playbook. Tap any program below for the exact steps to get ready, qualify faster, and close with confidence.

Explore loan types → Get the prep checklist
The loan guide

Pick your path to a "yes."

Every loan rewards the same thing: a prepared borrower. Here's what each program looks for and how to be ready before you apply.

01

FHA Loan

Government-backed, low down payment
Best for · First-time & lower-credit buyers
  • Build your credit to 580 or higher. This qualifies you with the 3.5% down payment option. Borrowers with scores from 550 to 579 may still qualify, but they typically need to put 10% down.
  • Save for the down payment and closing costs. FHA loans generally require 3.5% down, plus closing costs. Gift funds from family may be used if supported by a gift letter.
  • Keep your debt-to-income ratio manageable. In most cases, your DTI should be 43% or lower.
  • Income and Documentation: Show two years of steady income. Be prepared to provide W-2s, recent pay stubs, and bank statements as part of the FHA application process.
  • Mortgage Insurance: Plan for mortgage insurance premiums (MIP). FHA loans include both an upfront premium and a monthly premium, regardless of the size of your down payment.
Min credit: 550 (up to 10% down)
Primary Homes Only
Mortgage insurance: Required
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02

FHA Down Payment Assistance Loan

FHA financing + help with the cash to close
Best for · Buyers short on upfront cash
  • Pair an FHA loan with a DPA program—usually a grant or a small second loan that covers your down payment and/or closing costs.
  • Check your state and local housing finance agency (HFA). Most assistance is local, with its own rules.
  • Confirm first-time-buyer and income limits. Many programs cap household income and require you haven't owned recently.
  • Complete a homebuyer education course—frequently mandatory to receive the funds.
  • Understand the payback terms. Some assistance is forgiven over time; some must be repaid when you sell or refinance.
Form: Grant or 2nd loan
Education: Often required
Limits: Income & first-time
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03

FHA Zero Down Payment

Best for home buyers short on money for down payment
Best for · Home buyers short on money for down payment
  • No Down Payment Money: A special program for buyers who do not have enough cash for a down payment.
  • 100% CLTV with Silent Second: The first mortgage is combined with a silent second and packaged into one mortgage note.
  • Amortization on 2nd: The silent second is amortized over 10 years. To qualify, the borrower will need a 600-credit score and strong W-2 income.
Non-occupant co-borrowers allowed
No income limits
Loans to conforming limits
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04

Conventional Conforming Loan

Within Fannie Mae / Freddie Mac limits
Best for · Buyers with solid credit & standard budgets
  • Stay under the conforming loan limit (a baseline near $806,500 in 2025, higher in expensive areas).
  • Target a 620+ credit score—the higher you go, the better your rate.
  • Down payments can start as low as 3–5% for qualified buyers.
  • Budget for PMI if you put down under 20%—it drops off automatically as you build equity.
  • Keep DTI roughly under 45% and have a clean, well-documented financial picture.
Min credit: ~620
Down payment: 3–5%+
PMI: If under 20% down
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05

Non-Conforming Loan

Above conforming limits or non-standard
Best for · High-value homes & strong finances
  • Popular Loan Types: Non-Self-Employed loans, Bank Statement loans, 1099 Contractor, Profit and Loss, Asset Depletion loans, Foreign National, No Doc, and Self-Employed one-time-close construction loans.
  • Prepare a larger down payment. Often 10–20% or more.
  • Cash Reserves. Expect to show several months of mortgage payments in the bank.
  • Lower your DTI. Underwriting scrutiny is tighter, so leaner debt helps.
  • Financial Documentation Options. Tax returns, bank statements, P&L statement, asset statements, portfolio statement, nontaxable income, and proof of alternative income across all sources—and in some cases tax returns.
Min credit: ~700+
Down payment: 10–20%+
Reserves: Several months
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06

Construction-to-Perm Funding

Build, then convert to a mortgage—one closing
Best for · Buyers building a new home
  • Line up an approved, licensed builder with detailed plans, a fixed budget, and a clear timeline.
  • Expect a down payment ranging from 5% to 25% depending on the financials you're qualifying with.
  • Bring strong credit and reserves. Lenders take on more risk during construction.
  • Plan for interest-only payments while building, then a single conversion to your permanent loan—saving a second set of closing costs.
  • Account for draw schedules—funds release in stages as construction milestones are met.
Down payment: ~20%
Closings: One
During build: Interest-only
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07

Investor Loans

Financing for rental & income property
Best for · Landlords & rental investors
  • Prepare 15–25% down. Investment properties require more equity than a primary home.
  • Expect higher rates to reflect the added lender risk.
  • Show the property's income potential. DSCR-style loans can qualify you on projected rent rather than personal income.
  • Hold larger cash reserves—often six-plus months per property.
  • Keep credit strong and document any existing rental income with leases and tax returns.
  • Using Tax Returns — offers a lower down payment, usually 15%, and lower rates.
  • No Income and No Doc Programs — funding available for fix-and-flips, with or without renovations.
Down payment: 15–25%
Qualify on: Rent (DSCR) option
Reserves: 6+ months
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08

Bridge Loans

Short-term gap between buying & selling
Best for · Buying before your current home sells
  • Tap your existing home equity. Bridge loans use equity in your current property to fund the new purchase.
  • Have a clear exit strategy. These are short-term—typically 6 to 12 months—and repaid when your old home sells.
  • Prepare for higher rates and fees in exchange for speed and flexibility.
  • Show you can carry both payments briefly, or that the sale is imminent.
  • Get your current home market-ready so it sells quickly and closes the bridge.
Term: 6–12 months
Secured by: Existing equity
Key need: Exit plan
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09

Hard Money Loans

Fast, asset-based private financing
Best for · Flippers & time-sensitive deals
  • Focus on the property, not your credit. Private lenders underwrite the asset's value—often the after-repair value (ARV).
  • Be ready to move fast. Funding can close in days, which is the main advantage.
  • Budget for high rates and points. Speed and flexibility come at a premium.
  • Bring a down payment or equity and a detailed project/renovation plan.
  • Define your exit before you borrow—a sale or refinance to repay the short-term note.
Based on: Property value / ARV
Speed: Days
Cost: Higher rate + points
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The universal get-ready checklist.

No matter which loan you choose, 1st Florida Lending can expedite loan approvals when borrowers are prepared.

✓ Check & strengthen your credit score
✓ Lower your debt-to-income ratio
✓ Save for down payment + closing costs
✓ Build 2–6 months of cash reserves
✓ Gather W-2s, pay stubs & tax returns
✓ Avoid new debt before closing
✓ Get pre-approved early
✓ Document the source of every deposit