The FHA loan, explained by people who close them in Lee County.
FHA is the program that gets first-time and rebuilding buyers into a home with a smaller down payment and more forgiving credit rules. Here's how it actually works on a Cape Coral canal home or a Fort Myers starter — appraisal quirks, condo approvals, flood zones and all.
Government-insured, lender-funded, broker-shopped.
An FHA loan is an ordinary mortgage from an ordinary lender, insured by the Federal Housing Administration. Because the government stands behind part of the risk, lenders can say yes to buyers a conventional loan would price out: thinner credit files, a past bump in credit, a smaller down payment saved from a real paycheck instead of a windfall.
The trade is mortgage insurance. Every FHA loan carries an upfront premium (usually rolled into the loan) and an annual premium paid monthly. For a lot of Cape Coral and Fort Myers buyers that trade is worth it — it's the difference between buying this year and renting for three more — and the monthly premium can often be removed later by refinancing into a conventional loan once you've built equity.
We're a broker, not the FHA and not a bank. We take one application and shop it across our FHA-approved wholesale lenders, because each one layers its own rules on top of FHA's — and the lender that's a "no" on your file is frequently a "yes" next door.
Pure Lending is not affiliated with, or endorsed by, the Federal Housing Administration, the U.S. Department of Housing and Urban Development, or any government agency.
FHA at a glance
- Minimum down payment
- 3.5% of the purchase price with a 580+ credit score; 10% with a score of 500–579. Gift funds from family are allowed.
- Credit
- Program floor is 500, but most lenders set their own minimums above it. A recent bankruptcy or foreclosure carries a waiting period, not a lifetime ban.
- Mortgage insurance
- Upfront premium plus an annual premium paid monthly. Stays for the life of the loan at the minimum down payment; ends after 11 years with 10% or more down.
- Loan limits
- Set per county by HUD each year. Lee County (Cape Coral, Fort Myers) has its own limit — we'll confirm the current figure against the home you're looking at.
- Property
- Primary residence only. 1–4 units. Condos must be in an FHA-approved project or qualify for single-unit approval.
- Seller help
- Seller may pay up to 6% of the price toward your closing costs and prepaids.
Program rules summarized from HUD guidelines and subject to change; lender overlays vary. Not a commitment to lend.
Three things that go differently here than in the FHA brochure.
National lenders treat Cape Coral like a suburb of anywhere. It isn't. These are the local wrinkles we plan around on every FHA file.
Flood zones set the budget before the price does.
Gulf-access and canal homes across Cape Coral commonly sit in FEMA zone AE. On an FHA loan in a Special Flood Hazard Area, flood insurance is required by federal law, and the premium counts in your debt-to-income ratio. A quote that shows up late in underwriting can shrink what you qualify for.
Our rule: flood quote before the offer. Here's the full guide.
Most local condos aren't FHA-approved. Check first.
FHA will only insure a condo in a project on HUD's approved list, or one that passes Single-Unit Approval. A large share of Lee County condo buildings — especially older waterfront ones — aren't on it. Nothing is more frustrating than falling for a unit and discovering that in week two.
Send us the address and we'll check the project before you write an offer. If it fails, our condo financing page covers the alternatives.
The FHA appraisal looks at the house, not just the value.
FHA appraisers check minimum property standards: roof condition and remaining life, peeling paint on older homes, working systems, safe access, no exposed wiring. In a market with a lot of post-Ian repairs and older Cape Coral ranches, that inspection-lite catches things a conventional appraisal ignores.
It's rarely a deal-killer, but it can mean a seller repair before closing. Better to know the roof's age before you make the offer.
First homes, second chances, and buyers between two rules.
FHA is a strong fit for a first-time buyer in Fort Myers with a solid job and a modest down payment; for someone rebuilding credit after a rough couple of years; or for a buyer whose debt-to-income ratio is a little past what conventional will stretch to. It's a weaker fit when you have 20% down and strong credit — conventional usually wins there, and we'll tell you so.
An FHA streamline refinance is also available to existing FHA borrowers, and an FHA 203(k) option can fold renovation costs into a purchase.
- Ten-minute pre-qualification.No credit pull to start. We estimate where you land on FHA versus conventional and tell you which one we'd shop first.
- Documents and a real approval.Two years of income history, recent pay stubs, two months of bank statements, ID. Self-employed? Your list is different.
- Property check before you offer.Flood zone, condo approval status, roof age. Ten minutes of homework that prevents three weeks of pain.
- Lender shop and lock.Your file goes to the FHA-approved lenders whose overlays fit it. You pick; we lock in writing.
- Appraisal, underwriting, closing.A clean FHA purchase typically closes in three to four weeks. We chase the appraisal and any repair items daily.
What Cape Coral and Fort Myers buyers ask us about FHA.
If yours isn't here, text (239) 790-PURE and we'll add it.
What credit score do I need for an FHA loan in Florida?
Can I use an FHA loan to buy a condo in Cape Coral or Fort Myers?
Does FHA require flood insurance in Southwest Florida?
Does FHA mortgage insurance ever go away?
Can the seller pay my closing costs on an FHA loan?
Is Pure Lending part of the FHA or HUD?
Find out if FHA is your loan — or if something better is.
Ten minutes, no credit pull. We'll shop it FHA and conventional side by side and show you both.