FHA Loan Requirements in South Carolina: A Complete Guide for First-Time Homebuyers

Buying your first home is an exciting milestone! But it can also feel overwhelming, especially when navigating the various loan programs and requirements. If you’re looking to buy in South Carolina, FHA loans are a popular option for first-time homebuyers. With an FHA loan, you can get approved with a low down payment and credit scores as low as 500.

In this comprehensive guide, we’ll walk through everything you need to know about FHA loan requirements in South Carolina. We’ll cover

• FHA Loan Limits in South Carolina
• Minimum Credit Scores
• Down Payments
• Debt-to-Income Ratios
• Home Types Eligible for FHA Loans
• How to Find an FHA Lender

Let’s get started!

FHA Loan Limits in South Carolina

The first thing to understand is that the FHA sets loan limits based on the median home prices in each county. For 2024, FHA loan limits in South Carolina range from $498,257 to $1,127,900.

Here’s a quick overview of the loan limits:

• In most counties, the baseline FHA loan limit is $498,257 for a single-family home. This applies in counties like Greenville, Spartanburg, and York.

• In higher cost areas like Charleston County and Beaufort County, the limit goes up to $586,500 for a single-family home.

• The highest FHA loan limit in SC is $1,127,900, which applies to 4-unit properties in Berkeley and Charleston Counties.

So in short, the maximum you can borrow with an FHA loan depends on whether you’re buying a single-family home or multi-unit property, as well as the county it’s located in. The good news is that even the lowest FHA limit in the state is nearly $500,000!

Minimum FHA Credit Score Requirements

Your credit scores are another key factor for securing an FHA mortgage. Here are the minimum FHA credit score requirements:

• 500 FICO score – This is the absolute minimum score required for FHA loan approval. But only a handful of lenders will approve borrowers with scores this low.

• 580 FICO score – Most lenders require a minimum score of 580 to qualify for the best terms. This is the “sweet spot” for FHA financing.

• 620 FICO score – If your score is 620 or above, you’ll qualify for the lowest FHA interest rates available.

So while FHA loans are more flexible than conventional mortgages, your scores still impact the interest rate and lender fees. Aim for a 580 FICO or higher for the best deal.

FHA Down Payment Options

Another major perk of FHA loans is the low down payment requirement. Here are your options:

• 3.5% down – This is the standard minimum down payment for an FHA loan. With 3.5% down, you can buy a home priced up to the FHA loan limit in your county.

• 10% down – Required for borrowers with FICO scores below 580. This higher down payment helps offset the greater lending risk.

• 0% down – Extremely low-income borrowers may qualify for an FHA loan with no down payment through specific state and local programs. However, availability is limited.

The takeaway? With just 3.5% down and a 580 credit score, you can buy a home priced up to the FHA limit in your county. This makes homebuying attainable for buyers with minimal savings.

Debt-to-Income Ratio Limits

Lenders also look at your total monthly debt payments in relation to your income. This is called your debt-to-income (DTI) ratio.

Here are the FHA DTI requirements:

• Maximum DTI of 43% – Up to 43% of your gross monthly income can go toward your total debt payments, including the new mortgage.

• DTI of 31% or lower preferred – While up to 43% is allowed, lenders prefer DTIs of 31% or less for the best terms. The lower your DTI, the better.

Aim to get your DTI as low as possible by limiting other debts and maximizing your income. This will help you secure affordable mortgage payments.

Eligible Property Types for FHA Loans

FHA loans can be used to finance several types of residential properties, including:

• Single-family homes
• Townhomes
• Condos
• Multi-unit homes (2-4 units)
• Manufactured homes

For condos and multi-unit properties, the FHA has additional eligibility requirements. For instance, for a multi-unit home the fair market rent must exceed 1% of the purchase price.

The key is that any home purchased with an FHA loan must be your primary residence. FHA loans cannot be used to buy vacation homes or investment properties.

How to Find an FHA Mortgage Lender

The final step is connecting with a lender that offers FHA loans. Here are some tips for finding the best FHA mortgage lender:

• Check local banks and credit unions – Many have in-house FHA loan programs.

• Search online – Use LendingTree or another lending marketplace to compare multiple lenders at once.

• Look for an FHA specialty lender – These lenders deal exclusively in FHA loans, so they can find the best pricing.

• Verify FHA approval – Any lender you use must be approved by the FHA to offer their loans.

• Compare interest rates – Shop around among several lenders to find the lowest interest rate and fees.

• Review lender reviews – Check third-party review sites to evaluate customer satisfaction.

Take the time to shop around and get mortgage rate quotes from multiple FHA lenders. Comparing loan estimates will help you find the most affordable financing option.

The Bottom Line

Hopefully this guide gave you a thorough overview of FHA loan requirements in South Carolina! To recap, here are some key tips for securing FHA financing:

• Aim for a 580 credit score or higher
• Save at least 3.5% for a down payment
• Look for homes priced under the FHA loan limit for your county
• Keep your debt-to-income ratio below 43%
• Shop around to compare mortgage rates and fees

With an FHA-insured loan and as little as 3.5% down, you can achieve the dream of homeownership! Use this guide to understand your FHA mortgage options and set yourself up for success.