Buyer education
Types of home loans, explained without the sales pitch
Nobody should be talked into a loan program by somebody who benefits from the choice. Here is what each one is, what it asks of you, and where each one quietly falls apart.
Start here
If this is your first house
The most useful thing I can tell a first-time buyer is that you almost certainly need less cash than you think, and that the number you need is not the down payment — it is the down payment plus closing costs plus a few months of breathing room. Work that number out before you fall for a house.
Down payment
3% to 3.5% is normal on the entry programs. Zero on USDA and VA if you qualify. Twenty per cent is not required and never has been.
Closing costs
Lender fees, title, prepaid taxes and insurance, and the first year's homeowner's policy. Often 2% to 5% of the price. Sellers can sometimes contribute — that is a negotiation.
Reserves
Money left after closing. Some programs require it, and everyone should want it. A house finds something to spend money on in the first six months.
Escrow and taxes
In Florida your property tax and insurance are usually collected monthly with the payment. Ask for the full payment number, not the principal and interest.
Get a full pre-approval, not a pre-qualification. A pre-qualification is a chat. A pre-approval means credit was pulled and income documents were reviewed. In Macclenny or on the Westside that is the difference between an offer that gets taken seriously and one that does not.
Program one
FHA loans
FHA is the most common first-time buyer loan in this market for a straightforward reason: it asks 3.5% down and it tolerates credit that is still healing. If you had a rough patch two years ago, this is usually the program that still says yes.
- 3.5% down at the standard tier.
- Mortgage insurance in two parts — an upfront premium financed into the loan, and an annual premium collected monthly that on most modern FHA loans lasts for the life of the loan. Refinancing out later is the usual exit.
- Loan limits are set county by county by HUD and change annually. Look yours up on the HUD limits tool rather than trusting any number you read online.
- Two-to-four unit properties are allowed if you live in one of them. That is a legitimate route into a first investment, and it is what people mean by house hacking.
The appraiser holds the house to minimum standards. Peeling paint on a pre-1978 home, missing handrails, exposed wiring, an aged roof — all common in older Baker and Westside housing stock, and all things that must be resolved before closing. Usually fixable. Always worth building time into the contract for.
Program two
USDA Rural Development loans
This is the program people in Baker County most often qualify for and least often know about. The word rural puts them off. It should not — USDA eligibility is a map, and large parts of Baker County, western Nassau and the outer edges of Clay sit inside it.
- No down payment for buyers who qualify.
- Two tests. The property must sit inside an eligible area, and household income must be under the limit for that county and household size. Both, not either.
- Guarantee fees apply upfront and annually in place of conventional mortgage insurance.
- Owner-occupied only. Not for rentals, not for second homes.
- Water and septic get attention. On a rural property expect requirements around the well, the water test and the septic system. Start those early — they have lead times.
Check the exact address at the USDA property eligibility map. Boundaries do get redrawn, and a house that qualified a few years ago may not now.
Program three
VA loans
I hold the Military Relocation Professional designation and I work with families moving in and out of NAS Jacksonville, Mayport and Kings Bay constantly. The VA benefit is the strongest financing tool available in this market and it gets underused, usually by people who assume it is complicated.
- No down payment on most purchases, and — the part people miss — no monthly mortgage insurance at all.
- A funding fee instead. Per the Department of Veterans Affairs, first use with no down payment is 2.15% of the loan amount and subsequent use is 3.3%, financed into the loan. Veterans receiving compensation for a service-connected disability are exempt.
- The VA appraisal includes a condition review against Minimum Property Requirements, which is separate from your own inspection and looks for different things.
- Entitlement can be restored and reused. Having used it before does not mean you cannot use it again.
Fee figures current as of August 2026 — confirm yours at va.gov.
Program four
Conventional loans
Written to Fannie Mae or Freddie Mac guidelines. If your credit is strong, this is usually the cheaper long-run answer than FHA, for one reason above all others: the mortgage insurance ends.
- Down payments from 3% on some first-time buyer products; 5% is common.
- Private mortgage insurance applies below 20% down and is cancellable once you have enough equity — unlike most FHA insurance.
- Pricing moves sharply with credit score.
- The 2026 baseline conforming limit for a one-unit property is $832,750 in most of the country, per the Federal Housing Finance Agency's November 2025 announcement.
- New construction in Clay County is very often written conventional, and builders frequently offer incentives tied to their own lender. You can take the incentive — just get two outside Loan Estimates first and count the incentive as part of the total.
The one people get wrong
Land, acreage and manufactured homes
A lot of what I sell in Baker County is not a subdivision house. Acreage, horse property, and manufactured homes on land all have financing rules of their own, and finding that out during underwriting is a bad day.
- Raw land is not a mortgage. Land loans are their own product, with larger down payments, shorter terms and fewer lenders.
- Acreage can complicate a conventional or FHA appraisal. Appraisers need comparable sales, and on a 15-acre parcel those can be scarce. Outbuildings and barns often contribute far less appraised value than they cost to build.
- Manufactured homes have specific rules about age, foundation type, and whether the home is titled as real property. Not every lender will touch them.
- Well and septic mean extra inspections on almost any financed purchase, and water testing is commonly required on FHA, VA and USDA files.
- USDA can be excellent on acreage, but there are limits on how much of the value can sit in the land rather than the house.
If you are looking at acreage, tell your lender that on the first call. It changes which of them can help you.
Side by side
The short comparison
| Program | Typical minimum down | Mortgage insurance | Best suited to |
|---|---|---|---|
| FHA | 3.5% | Upfront and annual, usually for the life of the loan | Limited cash, or credit still recovering |
| USDA | 0% | Upfront and annual guarantee fees | Owner-occupants in an eligible area under the income cap |
| VA | 0% | None. A funding fee instead | Eligible veterans, active duty, some surviving spouses |
| Conventional | 3–5% | PMI below 20% down, cancellable | Stronger credit, or anyone who wants the insurance to end |
| Jumbo | Often 10–20% | Varies by lender | Purchases above the conforming limit |
If down payment is the obstacle rather than income, read my down payment assistance page next.
Common questions
Do I really need 20% down?
No. It is one of the most persistent myths in real estate. Twenty per cent avoids mortgage insurance on a conventional loan, and that is the whole benefit. Plenty of my buyers close with 3.5%, and some with nothing down.
Will shopping several lenders hurt my credit?
Mortgage inquiries made within a short shopping window are scored as a single event. Get three Loan Estimates in the same week and compare them properly.
Can I use USDA on a property with acreage?
Often yes, but there are rules about how much of the total value can sit in the land, and about whether the property has income-producing agricultural use. Ask a lender who writes USDA regularly, not one who writes it occasionally.
Is the builder's lender a bad idea?
Not automatically. Builder incentives can be real money. Just get two outside Loan Estimates and compare the total cost including the incentive, rather than assuming either way.
What credit score do I need?
It depends on the program and on the individual lender's own overlay, which is usually stricter than the program minimum. Rather than guess, let a lender pull your credit and tell you exactly where you stand — it costs nothing and it is the only honest answer.
Want the honest version for your situation?
Tell me what you have to work with and what you are hoping to buy, and I will tell you what is realistic — including when the honest answer is that waiting six months is the better plan.
Important notices
This page is general information for Northeast Florida homebuyers. It is not financial, tax, legal or lending advice, and it is not a commitment to lend. Amanda Kinard is a licensed Florida REALTOR®, not a licensed mortgage loan originator.
Loan programs, limits, fees, credit thresholds and eligibility rules change, sometimes more than once a year. Every figure here carries the date it was checked. Confirm all of them with a licensed lender and the official program source before relying on them.
No lender or program provider is endorsed on this page. Amanda Kinard receives no compensation of any kind for directing business to any lender, and you are free to use any lender you choose.
Everywhere else on Amanda Kinard, REALTOR®
Every guide, market report and neighborhood page on this site, grouped by county.