Buying a home in Florida can be challenging. Supply is tight, and demand and prices are on the rise.
If you’re a first-time Florida homebuyer, navigating the process, particularly the money part, may seem overwhelming.
But help is available that will make the process smoother and can put buying a home within financial reach. A variety of community, state and federal first-time homebuyer programs, particularly the Florida Housing Finance Corp., has resources that range from advice and financial counseling to affordable mortgage programs.
Chip White, homebuyer administrator at Florida Housing Finance Corp., known as Florida Housing, said challenges facing Florida homebuyers are those that are familiar to buyers in other states, “primarily rising costs and supply shortages in some areas of the state.”
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Programs like Florida Housing, which is the state’s housing authority, and other government programs work with approved lenders to help first-time Florida homebuyers with the cost factor.
The programs also provide other financial help, including grants (money that doesn’t have to be paid back) and other boosts to keep down payments and costs low.
The median price (half sold for more, half for less) for a single-family home in Florida in 2019 was $264,000, according to Florida Realtors, an organization that represents Florida’s real estate brokers.
State economists have predicted that 347,000 people will move to Florida this year, almost 900 people a day. Many of them will want to buy homes. So, the trend of rising prices will likely continue.
Knowing what resources are available to help you to understand and tackle the tough market will make the process less overwhelming and help put you into your dream home.
Making Sense of Florida Homebuyer Resources
When researching housing options, you’ll see a lot of acronyms related to agencies, programs and products. Making sense of the alphabet soup is half the battle.
Some of the important ones that we’ll be referring to in this article are:
- FHFC – The Florida Housing Finance Corp., or Florida Housing. This is a go-to agency for low-to-moderate-income Floridians looking to buy a home, providing resources and programs to make the process clearer and affordable.
- FHA – The Federal Housing Administration, created during the heart of the Great Depression, in 1934. The FHA insures mortgages and construction standards.
- HUD – The U.S. Department of Housing and Urban Development, which oversees the FHA, also has a variety of programs that help homebuyers, including veterans and their spouses. HUD not only has programs, but extensive guidance on your rights as a homebuyer, how to shop for home and a mortgage, and more.
- USDA – The U.S. Department of Agriculture Rural Development agency also has programs for homebuyers in rural areas.
- VA – The U.S. Department of Veterans Affairs, which provides mortgage loans to members of the military, veterans and their spouses.
- PMI – Private mortgage insurance, which is usually required for borrowers whose down payment is less than 20%. This helps protect lenders if the borrower can’t pay and is foreclosed on. Most of the loans offered for low- and moderate-income first-time homebuyers have down payments of 3%, so this will likely be required if you’re buying a home.
You’ll also see a lot of references to 30-year fixed mortgages when you’re looking into buying a home. Those are the choice for 90% of homebuyers. A 30-year fixed rate mortgage means that you pay back the loan for the house over 30 years, with an interest rate and monthly payment that doesn’t change. These are the most common mortgages, because payments are lower, and thus more affordable, than 15-year rates.
Florida Housing Help for First-Time Buyers
One of the first places to visit if you’re a first-time Florida homebuyer is Florida Housing. It was created by the Florida Legislature 35 years ago to ensure that the state’s residents had affordable options for buying homes in a challenging market.
Florida Housing works with communities, nonprofits, developers, the federal government and more to develop and carry out programs that help people find the right home in the state.
It has programs for buyers, as well as renters, and also programs for developers that encourage them to build affordable homes. Potential homebuyers must meet certain income, and credit standards, and must be buying their first home to qualify for the Florida first-time homebuyers programs.
Florida Housing has three main programs for first-time homebuyers:
- Homebuyers Programs: Several 30-year fixed rate first mortgage loans to first-time homebuyers through participating lenders and lending institutions throughout the state, including a conventional 30-year mortgage, its 3% Plus 30-year mortgage, and its Military Heroes program for veterans and active-duty military.
- Down Payment Assistance Program: Down payment and closing cost assistance in the form of a second mortgage loan that’s used with Florida Housing’s first mortgage loan.
- Mortgage Certificate Program: A federal income tax credit that can be used with a first mortgage, which helps generate income for a borrower to use to make mortgage payments and meet other household expenses.
It also has a State Housing Initiative Partnership that helps first-time homebuyers meet financial challenges specific to certain parts of Florida. Florida Housing works with local government, organizations and Community Block Grant Entitlement cities (those that have received grants from HUD to help boost economic development). It’s worthwhile to check Florida Housing’s website to see if your community has a program that can further help you.
Here are the specifics on Florida Housing mortgage programs:
Florida HFA Preferred Conventional Loan
The Florida HFA Preferred Conventional Loan is a 30-year fixed-rate mortgage that gives first-time borrowers a break on private mortgage insurance. This is the most popular loan that Florida Housing offers because it reduces costs while allowing more people to qualify, White said.
“The product offers reduced mortgage insurance costs to qualified buyers, higher program income and purchase price limits than traditional ‘bond loans’ and is easier (less paperwork) for our participating lenders to originate,” he said.
Qualified borrowers only need private mortgage insurance that covers 18% of the value, rather than the 35% that’s usually standard when borrowing 97% of the home’s purchase cost (in other words, when making a 3% down payment).
Because the loan offers a cheaper insurance premium, monthly payments are lower.
Florida HFA Preferred 3% Plus Conventional Loan
This has the same benefits of the Florida HFA Conventional loan, but also provides a grant for a 3% down payment and closing costs. Because it’s a grant, it doesn’t have to be repaid.
Military Heroes Government Loan Program
Active-duty military personnel and veterans can take advantage of several programs that help with 30-year fixed-rate mortgages, including from FHA, VA and the USDA Rural Development. Interest rates for these loans are typically lower than for conventional ones, and they can be used in tandem with other Florida Housing down payment and closing cost assistance programs to further lower costs.
HFA Preferred Grant
Florida Housing’s Preferred Grants provide 3% or 4% of the purchase price of the house to use as down payment and closing assistance. It doesn’t have to be paid back, but must be used with one of Florida Housing’s first-time homebuyers loan programs.
Florida Mortgage Credit Certificate Program (MCC)
The Mortgage Credit Certificate program allows the first-time homebuyer to claim 10%-50% of their mortgage interest up to $2,000 for as long as they live in the home. The balance can still be claimed as mortgage income tax credit. The credit applies to first-time homebuyers as well as veterans who are buying a home.
Qualifying for Florida Housing First Time Homebuyer Benefits
One phrase you’ll see constantly when researching your home-buying option is “qualified buyers.” To qualify for programs from Florida Housing, HUD and other agencies, the home buyer must not exceed a certain income, but that varies depending on what county he or she lives in and how big the household is. There are also limits on how expensive the house can be, which also varies by county.
Here are some things that are standard no matter which of Florida’s 67 counties you live in:
- A credit score of 620
- The property must be in Florida
- It must be the buyer’s primary residence.
- The buyer must take a 6-8 hour homebuyer education course.
Some of these are obvious, but the credit score qualification is something to pay special attention to, no matter what your score may be. Fair Isaac Corp., which sets FICO, or credit, scores, is changing how it comes up with scores, and unpaid loans, too many personal loans and other factors could mean a lower score. It’s definitely worth checking your credit score and figuring out how to make it better if you’re thinking about buying a home.
There are also a lot of other factors that go into getting a mortgage, no matter what resources you use as a first-time homebuyer.
Whether your finances are solid, or you’re concerned your credit score or income may be too low, the homebuyers wizard on Florida Housing’s website can help you understand what you may qualify for, as well as providing information on where to apply for loans.
“Since our loans are originated through program-approved and trained lenders around the state, we also list some of our participating loan officers on the wizard,” White said. “These lenders can prequalify and determine which products are best suited to the borrower’s situation.”
National First Time Homebuyer Programs
There are also national first-time homebuyer programs available for those looking to get into that dream house.
One of the most helpful websites to visit is HUD’s. “Helping people become homeowners is one of the most important things HUD does,” the site says.
HUD offers free counseling for those concerned about being able to buy a home, and even programs for teachers, firefighters, law enforcement officers and others that offer breaks on home-buying costs under its Good Neighbor Next Door program.
The most common national housing loans are:
- FHA loans – If your credit score is low, this may be the program for you. FHA down payments for those with a credit score of 580 or higher start at 3.5% of the purchase. If your credit score is lower than 580, the FHA requires a 10% down payment to insure the loan. FHA loans require mortgage insurance for the life of the loan.
- VA loans – Those who have served, or are serving, in the military and their spouses can get VA loans through the U.S. Department of Veterans Affairs, some of which don’t require down payments or mortgage insurance.
- USDA loans – These loans have no down payment for people who live in rural areas, with income requirements that vary by region. Borrowers with credit scores below 640 have other requirements.