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 familiar to buyers in other states, “primarily rising costs and supply shortages in some areas of the state.”
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 of the houses sold for more, half sold for less) for a single-family home in Florida in 2020 was $299,900, according to FloridaRealtors.org, an organization that represents Florida’s real estate brokers. That is a $35,000 leap from the 2019 median price of $264,000.
State economists have predicted that 338,200 people will move to Florida in 2020, meaning 950 people a day relocate to the Sunshine State. Many of them, who are seeking warmer weather and shelter from the high income-tax states up north, will want to buy homes in sunny Florida. 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, a mortgage and more.
- USDA – The U.S. Department of Agriculture Rural Development agency 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 likely will 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 in 1980to 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 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 boost economic development). It’s worthwhile to check Florida Housing’s website to see if your community has a program that can help you.
Florida Housing Eligibility
- First-time home buyers, veterans and active military are eligible to receive 30-year fixed-rate mortgages.
- Residents in all 67 of Florida’s counties are eligible for these mortgages.
- These loans can be combined with down payment or closing cost assistance.
- Interest tax credits on mortgages are also available.
- The property must be located in Florida and be a primary residence.
- Borrowers will be required to meet income, credit and purchase price requirements.
- A 6-to-8-hour home-buyer education course will be required.
Florida Housing Mortgage Programs
Completing the pre-qualification and pre-approval processes with lenders will reveal much about your financial status and will properly lay the groundwork for the type of mortgage that best fits your budget and financial goals. Those processes might also present some options in the form of government assistance programs that may be available to you based on your credentials.
As you will see, you have several options in finding the loan that best works for you and your budget. As a first-time home buyer in Florida, you could get an HFA Conventional Loan over 30 years, an HFA Preferred 3% Plus Conventional that is s a grant and won’t have to be repaid, an HFA Preferred Grant that requires a down payment and the coverage of closing costs or a Mortgage Credit Certificate Program which allows the first-time homebuyer to claim an income tax credit on a certain percentage of the mortgage interest. Also, there is a Salute Our Soldiers Military Loan Program that allows active-duty military personnel and veterans to take advantage of several programs that help with 30-year fixed-rate mortgages.
Read on for more detailed information about each loan option:
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).
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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.
Salute Our Soldiers Military 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 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 or higher
- 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.
Your FICO credit score could be the most important part of applying for a mortgage. Late payments, maxed-out credit cards, loan defaults and applying for credit too often all negatively impact your credit score.
It is worth your time to get a free credit report from each of the three major credit bureaus (Experian, Equifax and TransUnion) and see where you stand. There are steps you can take to improve your credit score in six months and make you a more attractive candidate for first-time mortgage.
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 their dream house.
One of the most helpful websites to visit is HUD’s. The HUD site says that “Helping people become homeowners is one of the most important things HUD does.”
HUD offers free counseling for those worried whether they’re qualified 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 price. 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.
Becoming a first-time homebuyer in the state of Florida might seem daunting because of the rising prices and the occasional scarcity of supply, but there are plenty of options and assistance programs available to make such a dream become a reality.
If this is your first time buying a home, get ready for some serious paperwork to see if you’re qualified for a mortgage and what the terms and conditions will be. Have the proper documentation regarding your income, savings, credit score and other financial Information available when you fill out a loan application.
If you know you’re going to need financial help with the mortgage, agencies like Florida Housing can help identify affordable options. Checking your credit score and doing what is necessary to improve it can greatly improve your chances of qualifying for approval.
Buying a home is typically the largest purchase you will ever make, so be sure to do it with your eyes wide open to the options that are available to you. There are plans to fit almost every budget and offer assistance toward the down payment and closing costs so that you can, too, can own your own home.
About The Author
Maureen Milliken has been writing about finance, banking, investment, entrepreneurship, real estate and other related topics for more than 30 years. She started as the “Business Beat” columnist for the now-defunct Haverhill (Mass.) Gazette and currently is one of the hosts of the Mainebiz business-focused podcast, “The Day that Changed Everything” in addition to her daily writing. She also is is the author of three mystery novels and two nonfiction books.
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