If you’re dreaming of becoming a homeowner but feeling overwhelmed by the complexities of the mortgage market, this guide is for you. We’ll explore the details of FHA loans specifically for South Carolina residents, especially first-time homebuyers, low-to-moderate-income families, and those with less-than-perfect credit. Depending on your location, you can typically borrow $472,030 for a single-family home, although the limit is higher in more expensive areas like Charleston.
No matter where you’ve set your sights across the Palmetto State, there’s a mortgage out there to meet your needs. Here’s everything you need to know about getting an FHA loan in South Carolina.
Why choose an FHA loan?
FHA loans are a great way for new homebuyers to unlock homeownership. Backed by the Federal Housing Administration, these mortgages offer many benefits, including more lenient credit score criteria and very low down payments. They also offer competitive interest rates, access to first-time homebuyer resources and down payment assistance, and even a streamlined refinance option for down the road.
These are the FHA requirements for South Carolina residents:
- Credit score: 500
- Down payment: 3.5%
- Mortgage insurance premium (MIP): Between 0.15% to 0.75% of the loan amount
- Debt-to-income ratio: 43% or below
- Property requirements: Must receive satisfactory FHA appraisal
- Loan limits: $472,030 to $1,035,000 depending on location and number of units
Let’s explore these requirements in more detail.
FHA credit score requirements in SC
While FHA loans are generally more flexible than conventional loans, there is still a minimum score required. The minimum credit score to get an FHA loan in South Carolina is 500 (with a 10% down payment) or 580 (with a 3.5% down payment).
Meeting that credit score threshold doesn’t guarantee you will qualify for an FHA loan, but it does make you eligible.
Down payment for FHA loans
To get an FHA loan in South Carolina, you’ll need to put down a minimum of 3.5%. This is much less than the standard 20% down payment often recommended by lenders. Such a low down payment can make home ownership more accessible for low- to moderate-income families and first-time buyers.
If your credit score is between 500 and 579, you’ll need to put down 10% — but that’s still a significant savings.
Another requirement of FHA loans in South Carolina (and across the country) is mortgage insurance. The mortgage insurance premium (MIP) is an added fee that is required by lenders to secure the loan with a down payment under 20%.
There are two parts to the MIP: the upfront payment, which is 1.75% of the loan amount and due at closing, and the monthly premium. It ranges from 0.15% to 0.75% depending on how much you borrow, your down payment, and the length of the loan. The monthly premium is in addition to your interest, principal, taxes, and other parts of your monthly mortgage payment.
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. If yours is above 43%, see if you can find ways to pay off a car note or credit card, for example. That will help you show that you have room in your budget for your new mortgage.
The FHA requires minimum property standards in South Carolina as well as the rest of the country. They won’t back a loan on a home that is in poor condition or one that poses a safety hazard. The home must be:
- Structurally sound
To ensure the home meets these standards, you’ll need an FHA appraisal. This professional assessment will evaluate the home’s interior and exterior as well as comparable properties to come up with an accurate valuation as well as assurance that the home is safe and sound.
FHA loan limits 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:
- One unit: $472,030
- Two units: $604,400
- Three units: $730,525
- Four units: $907,900
These limits apply to the following counties: Abbeville, Aiken, Allendale, Anderson, Bamberg, Barnwell, Calhoun, Cherokee, Chester, Chesterfield, Clarendon, Colleton, Darlington, Dillon, Edgefield, Fairfield, Florence, Georgetown, Greenville, Greenwood, Hampton, Horry, Kershaw, Lancaster, Laurens, Lee, Lexington, Marion, Marlboro, McCormick, Newberry, Oconee, Orangeburg, Pickens, Richland, Saluda, Spartanburg, Sumter, Union, Williamsburg, and York.
In Jasper County, the limits are:
- One unit: $4785,300
- Two units: $621,250
- Three units: $750,950
- Four units: $933,300
In Berkeley, Charleston, and Dorchester counties, the limits are:
- One unit: $538,200
- Two units: $689,000
- Three units: $832,850
- Four units: $1,035,000
It’s important to get preapproved for a loan before you begin the house hunting process. You’ll need your personal information and proof of income for the lender, who will check your credit and provide a loan estimate and rate. When you have a preapproval letter from a lender, home sellers will know that you’re a serious homebuyer. It also helps streamline the mortgage closing process.
At Fairway Mortgage of the Carolinas, we know how important it is to carry your loan all the way to close. That’s why we offer you our Fairway guarantee: We’ll get you to the closing table — or your money back.
Getting an FHA loan can help you secure your South Carolina dream home. Make sure you meet the FHA requirements for a home loan in South Carolina and begin your journey as soon as today. Contact us or get started online to get connected to a mortgage specialist who can help!