Understanding FHA Loan Requirements in South Carolina

Are you struggling to afford a home in South Carolina? Before you give up the search, consider looking into an FHA-insured loan.

Loans backed by the Federal Housing Administration (FHA) can be a huge help to buyers with limited income or savings. For a single-family home in South Carolina, you can potentially qualify for an FHA loan of up to $498,257 or even $586,500 (depending on your county) with low credit and a down payment as low as 3.5%.

Getting approved for an FHA loan in South Carolina can be an excellent way for first-time homebuyers or those with lower credit scores to purchase a home. FHA loans require lower down payments and credit scores compared to conventional mortgages. However, there are still certain FHA loan requirements borrowers need to meet to qualify.

In this comprehensive guide, we’ll explain everything you need to know about FHA loan requirements in South Carolina, including:

FHA Loan Limits in South Carolina
Minimum Credit Score Requirements
Down Payment Requirements
Debt-to-Income Ratio Limits
Types of Homes You Can Buy
Mortgage Insurance Requirements

Understanding these key criteria can help you determine if an FHA mortgage is right for your home buying needs.

FHA Loan Limits in South Carolina

The first FHA requirement to check is whether the loan amount you need falls under your county’s FHA lending limits. The FHA sets maximum mortgage amounts that vary by county.

Here are the current FHA loan limits for South Carolina counties in 2024

Most South Carolina counties: $498,257 for a single-family home
Beaufort, Berkeley, Charleston, Dorchester, Jasper counties: $586,500 for a single-family home
Horry County: $546,250 for a single-family home

You can also qualify for higher FHA loan amounts if you purchase a 2-4 unit multi-family property in South Carolina:

2-unit: Up to $750,800
3-unit: Up to $907,550
4-unit: Up to $1,127,900

As long as the FHA mortgage amount you need is equal to or less than your county limit, you can proceed with the application process. The home’s purchase price can exceed the limit, you just can’t finance more than the limit with an FHA loan.

Minimum Credit Score Requirements

To qualify for an FHA loan, most lenders require a minimum credit score of 580. Some lenders may approve scores as low as 500, but you’ll get better terms with a 580+ score. The higher your credit score, the lower your interest rate.

If you had a previous foreclosure, you can still potentially qualify as long as it was over 3 years ago. The FHA offers more flexible credit guidelines than conventional loans.

Before submitting an application, check your credit reports and scores so you know where you stand. Take time to improve your credit if your scores fall below 580.

Down Payment Requirements

FHA loans require just a 3.5% down payment for borrowers with credit scores of 580 or above. This low down payment requirement makes them attractive to first-time home buyers who don’t have 20% to put down.

For FHA borrowers with credit scores between 500-579, the minimum down payment is 10%.

Either way, your down payment can be funded from these sources:

Savings
Checking/investment accounts
Retirement accounts
Gift funds
Down payment assistance programs

The FHA doesn’t require you to have months of mortgage payments in reserves like conventional loans. However, some lenders may require 1-3 months reserves.

Debt-to-Income Ratio Limits

Your debt-to-income (DTI) ratio compares your total monthly debt payments to your gross monthly income. FHA loans require your DTI to be less than 43%.

This includes:

Proposed mortgage payment (principal, interest, taxes, insurance)
Monthly student loan payments
Car loan payments
Credit card payments
Child support
Other debts

Aim for a DTI of 36% or lower whenever possible, even though 43% is allowed. The lower your DTI, the more affordable your mortgage payment becomes.

Types of Homes You Can Buy

FHA loans can be used to buy single-family homes, duplexes, triplexes, fourplexes, condos, and townhomes. Manufactured and mobile homes may also qualify, as long as they meet certain criteria.

However, FHA homes must be owner-occupied as your primary residence. You can’t use FHA financing to buy a vacation home or investment property.

If you purchase a multi-unit home, you’ll have to live in one of the units. You’ll also need to show rental income from the other unit(s) can help you cover the mortgage payments.

Mortgage Insurance Requirements

FHA loans require both upfront and annual mortgage insurance:

Upfront Mortgage Insurance: This is a 1.75% fee charged at closing and added to your loan amount. On a $200,000 loan, it would equal $3,500.

Annual Mortgage Insurance: This is an annual premium charged monthly along with your mortgage payment. The annual premium varies between 0.45% – 1.05% depending on your down payment amount and loan term.

On a $200,000 loan amount, annual MIP may range from $900 – $2,100 per year. You pay this until you refinance or reach 78% loan-to-value ratio when the annual MIP can be removed.

Compare FHA Lenders in South Carolina

Now that you understand the key FHA loan requirements, it’s time to compare loan options from different lenders. Work with an FHA-approved lender that offers competitive rates/fees and excellent customer service.

Here are a few top-rated FHA mortgage lenders to consider in South Carolina:

SoFi – Great online lender with low rates and fees. Popular for FHA loans.
Fairway Independent Mortgage – Local mortgage broker with knowledgeable loan officers.
New American Funding – Nationwide lender with great reputation for FHA lending.
Navy Federal Credit Union – Top credit union offering membership to military families and DoD.

Get rate quotes from multiple lenders. Compare interest rates, APR, loan costs, lender fees, and more. This helps you find the best FHA mortgage deal.

Other Homebuyer Assistance Programs

Beyond FHA financing, South Carolina residents can also check out these down payment assistance programs for first-time buyers:

SC Housing – Offers down payment assistance loans around $6,000 – $14,000.
Palmetto Heroes – Up to 6% of the mortgage amount to help veterans, teachers and more.
SCHEFA Mortgage Tax Credit – Helps cover closing costs. $2,000 – $5,000 available.
County/City DPA Programs – Check for local down payment help programs.

If you qualify based on income limits, these programs provide grants, silent second loans or forgivable loans. The funds help cover your down payment and closing costs so you can buy a home with less out-of-pocket cash needed.

Wrap Up

Connect with a lender today to start the pre-approval process. Get pre-qualified to see your estimated rate/payment. Shopping lenders and mortgage rates is free.

Buying a home is a big investment. Take the time to explore all your loan options beyond FHA to find the best mortgage for your budget and financial situation. Best of luck with your upcoming home purchase!

How to qualify for an FHA loan in South Carolina

To qualify for an FHA mortgage, you’ll have to apply through an FHA-approved mortgage lender, which includes your credit union or bank.

Since these loans are insured by the FHA, they can be easier in some instances to qualify for than conventional loans. Here’s what you need to be approved:

→ Credit score. The FHA’s minimum credit score is 500 but some lenders have higher score requirements. If you’ve experienced a foreclosure in the past, you can typically qualify as long as at least three years have passed.

→ Down payment. Your minimum down payment is based on your credit scores. If your scores are below 580, it’s 10%. For all other borrowers, the minimum is 3.5%.

→ Income. You must show you have enough income to cover the mortgage payments. Most lenders will not approve you for a mortgage payment that’s equal to 31% or more of your gross monthly income.

→ Debt-to-income ratio (DTI). Your debt-to-income ratio looks at how much of your income goes to debt payments. For an FHA loan, your monthly debt payments (including the mortgage) can’t exceed 43% of your gross monthly income.

→ Property types. You can use FHA loans to buy various types of single-family homes, buildings with up to four units, manufactured homes and condos, as long as the property is your primary residence.

South Carolina FHA loan limits by county

County name	One unit	Two units	Three units	Four units	Median sales price
ABBEVILLE	$498,257	$637,950	$771,125	$958,350	$253,000
AIKEN	$498,257	$637,950	$771,125	$958,350	$297,000
ALLENDALE	$498,257	$637,950	$771,125	$958,350	$60,000
ANDERSON	$498,257	$637,950	$771,125	$958,350	$305,000
BAMBERG	$498,257	$637,950	$771,125	$958,350	$36,000
BARNWELL	$498,257	$637,950	$771,125	$958,350	$69,000
BEAUFORT	$546,250	$699,300	$845,300	$1,050,500	$475,000
BERKELEY	$586,500	$750,800	$907,550	$1,127,900	$510,000
CALHOUN	$498,257	$637,950	$771,125	$958,350	$245,000
CHARLESTON	$586,500	$750,800	$907,550	$1,127,900	$510,000
CHEROKEE	$498,257	$637,950	$771,125	$958,350	$150,000
CHESTER	$498,257	$637,950	$771,125	$958,350	$420,000
CHESTERFIELD	$498,257	$637,950	$771,125	$958,350	$113,000
CLARENDON	$498,257	$637,950	$771,125	$958,350	$165,000
COLLETON	$498,257	$637,950	$771,125	$958,350	$186,000
DARLINGTON	$498,257	$637,950	$771,125	$958,350	$180,000
DILLON	$498,257	$637,950	$771,125	$958,350	$35,000
DORCHESTER	$586,500	$750,800	$907,550	$1,127,900	$510,000
EDGEFIELD	$498,257	$637,950	$771,125	$958,350	$297,000
FAIRFIELD	$498,257	$637,950	$771,125	$958,350	$245,000
FLORENCE	$498,257	$637,950	$771,125	$958,350	$180,000
GEORGETOWN	$498,257	$637,950	$771,125	$958,350	$340,000
GREENVILLE	$498,257	$637,950	$771,125	$958,350	$305,000
GREENWOOD	$498,257	$637,950	$771,125	$958,350	$170,000
HAMPTON	$498,257	$637,950	$771,125	$958,350	$60,000
HORRY	$498,257	$637,950	$771,125	$958,350	$335,000
JASPER	$546,250	$699,300	$845,300	$1,050,500	$475,000
KERSHAW	$498,257	$637,950	$771,125	$958,350	$245,000
LANCASTER	$498,257	$637,950	$771,125	$958,350	$420,000
LAURENS	$498,257	$637,950	$771,125	$958,350	$305,000
LEE	$498,257	$637,950	$771,125	$958,350	$63,000
LEXINGTON	$498,257	$637,950	$771,125	$958,350	$245,000
MARION	$498,257	$637,950	$771,125	$958,350	$122,000
MARLBORO	$498,257	$637,950	$771,125	$958,350	$79,000
MCCORMICK	$498,257	$637,950	$771,125	$958,350	$170,000
NEWBERRY	$498,257	$637,950	$771,125	$958,350	$133,000
OCONEE	$498,257	$637,950	$771,125	$958,350	$220,000
ORANGEBURG	$498,257	$637,950	$771,125	$958,350	$95,000
PICKENS	$498,257	$637,950	$771,125	$958,350	$305,000
RICHLAND	$498,257	$637,950	$771,125	$958,350	$245,000
SALUDA	$498,257	$637,950	$771,125	$958,350	$245,000
SPARTANBURG	$498,257	$637,950	$771,125	$958,350	$250,000
SUMTER	$498,257	$637,950	$771,125	$958,350	$165,000
UNION	$498,257	$637,950	$771,125	$958,350	$69,000
WILLIAMSBURG	$498,257	$637,950	$771,125	$958,350	$30,000
YORK	$498,257	$637,950	$771,125	$958,350	$420,000

South Carolina FHA Loans – How to Qualify

FAQ

What are the requirements for an FHA loan in SC?

A credit score of 580 or higher: A lender may accept credit scores of 500-579 under certain conditions. A credit score lower than 580 will require a larger down payment. Minimum of two years employment: Must have verifiable, steady, and consistent income. You will need documentation.

What will disqualify you from an FHA loan?

The three primary factors that can disqualify you from getting an FHA loan are a high debt-to-income ratio, poor credit, or lack of funds to cover the required down payment, monthly mortgage payments or closing costs.

What is the downside of an FHA loan?

FHA loans require borrowers to pay mortgage insurance premiums (MIPs) at closing and throughout the life of the loan. Specifically, you’ll pay 1.75% of the loan amount at closing as your upfront MIP. Then, you’ll pay MIPs of 0.15% to 0.75% of the loan amount every year.

Is it harder to qualify for an FHA loan?

While conventional mortgages usually require a credit score of 620 or more, FHA loans are open to borrowers with credit scores as low as 500. You don’t need a big down payment. If your credit score is 580 or more, you could qualify to put down just 3.5%. Interest rates are competitive.

Can I get an FHA loan in South Carolina?

To qualify for an FHA loan in South Carolina, your home loan must be below the local FHA loan limits in your area. For 2024, the maximum loan limit in South Carolina is $498,257 for a single-family home and $1,127,900 for a four-plex. Limits varies by county. The minimum loan limit is $5,000. Loan limits vary by county and home size.

What is the loan limit for FHA loans in South Carolina?

The loan limit for FHA loans in South Carolina is generally $472,030. However, these limits vary depending on location, number of units, and the cost of housing in certain parts of South Carolina. These are the baseline loan limits in SC:

How much is the FHA floor in South Carolina?

For 2024, the FHA’s national floor is $498,257 for single-family homes, which is the limit that applies to most counties in South Carolina. That floor is up $26,227 from the amount that was available throughout most of the state in 2023.

What is the debt-to-income ratio for an FHA loan in South Carolina?

Your debt-to-income ratio (DTI) must be 43% or less to get an FHA loan in South Carolina. That means your total debts cannot be more than 43% of your income. The FHA sets specific debt-to-income percentages for home mortgage approvals to ensure that borrowers should be able to repay their loans. The lower your DTI, the better.