Florida First-Time Homebuyer Programs

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., have resources that range from advice and financial counseling to affordable mortgage programs and help with down payments and closing costs.

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.”

Florida Housing and other government programs work with approved lenders to help first-time Florida homebuyers with costs. 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 interest rates low.

The median price (half of the houses sold for more, half sold for less) for a single-family home in Florida in 202 was $396,558 according to Florida Realtors research department. That’s a jump of $ a $48,500 leap from the 2021 median price of $348,000

State economists predict that 360,758 people will move to Florida in 2022, meaning that nearly 1,000 people a day relocate to the Sunshine State. Many of them will be first-time Florida homebuyers. That means the trend of rising prices likely will 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 Programs

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 refer to in this article are:

• FHFC – The Florida Housing Finance Corp., or Florida Housing, 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, getting 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 Affair provides mortgage loans to members of the military, veterans and their spouses.
• PMI – Private mortgage insurance, which usually is 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. This type of loan is 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 1980 as an independent agency that ensures the state’s residents have affordable options for buying homes, as well as renting, in a challenging market.

Florida Housing works with communities, nonprofits, developers, the federal government and more to create 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 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.

Florida Housing 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.

Qualifying for Florida Housing First-Time Homebuyer Benefits

There are income limits in order to qualify for first-time homebuyer programs from Florida Housing, HUD and other agencies, as well as to how expensive the home can be. The income limits and price cap vary by county.

Standards, no matter which of Florida’s 67 counties you live in:

• 620 or higher credit score
• 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.

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 will lower 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 and make you a more attractive candidate for first-time mortgage.

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.”

Statewide and Regional First-Time Homebuyer Programs

Florida state and regional programs for first-time homebuyers include:

• HUD-approved housing counseling agencies. Agencies approved by HUD are nonprofits that provide free or low-cost counseling for Florida residents not only on home-buying issues, but also renting, mortgages, foreclosure and more. They include Fannie Mae’s counseling program, the Financial Counseling Association of America and National Foundation for Credit Counseling.
• Florida Association for Community Action. Regional Community Action Programs provide resources such as low-income emergency home repair, weatherization assistance, energy assistance, legal resources and more.
• Florida Housing Finance Corporation. Florida Housing provides assistance for homebuyers and renters, with programs for housing assistance, low-cost loans, down payment help, education and more.
• Habitat for Humanity. A nonprofit organization that helps low-income individuals and families own a home, using volunteer help and the owner’s “sweat equity” to build or renovate housing.
• Community Development Block Grants. The HUD Community Development Block Grant program provides money for states to renovate or build housing, as well as make other improvements, to neglected areas. In Florida, it’s distributed through state and municipal programs.
• HOME Investment Partnership Program. Another HUD program, HOME provides grants to local agencies that help low-income residents buy and repair homes through a variety of programs.
• State Housing Initiatives Partnership (SHIP) Program. Administered through Florida Housing, SHIP provides incentives to local governments to build and maintain affordable and multi-family housing.
• USDA Rural Housing Service. Provides low-interest loans to buy and repair single-family and multi-family housing in areas that qualify as “rural.”
• Hometown Heroes Housing Program. The Florida Housing program helps front line and health care workers buy or renovate first homes with down payment and closing cost assistance so they can live in the community in which they work. It also offers lower mortgage rates for military members who are first-time homebuyers.

Florida Housing Mortgage Programs

Completing the pre-qualification and pre-approval process 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 point you to some government assistance programs that may be available to you, depending on your income or other credentials.

There are several options in the state for finding the loan that best works for you and your budget. As a first-time home buyer in Florida, you can get an HFA Conventional Loan over 30 years; an HFA Preferred 3% Plus Conventional, which is a grant, so it doesn’t have to be repaid; an HFA Preferred Grant that requires a down payment and 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. There is also 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).

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 the FHA, VA or 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.

Down Payment Assistance: Florida Programs

Coming up with a down payment can be the toughest part of affording a home for people without a high income. Florida Housing has programs that help with down payments, all of which must be used in conjunction with a Florida Housing mortgage program.

Florida Assist Second Mortgage Program (FL Assist). Provides down payment loans of up to $7,500 at 0% interest for eligible borrowers, and up to $10,000 for those getting an FHA, VA or USDA mortgage. The loan is in the form of a deferred second mortgage, so it’s not paid back until the home is sold or the borrower refinances.

HFA Preferred Grants (3, 4 and 5%). Qualified borrowers can use 3, 4 or 5% of the home’s purchase price toward down payment and closing costs, forgiven after five years.

Florida Homeownership Loan Program (FL HLP). Home buyers can get up to $10,000 at 3% interest, in the form of a second mortgage. It must be paid in full if the home is sold or refinanced, otherwise it must be paid off in 15 years.

National First-Time Homebuyers 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.

Explore Mortgage Lenders and Build Credit

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.

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 or that offer assistance toward the down payment and closing costs.

Do some online research to compare lenders and mortgage loan terms and find the best online mortgage deals. You want to make sure that you get a mortgage that fits your needs and allows you to buy the right home for you.

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.

Even if you don’t feel you need financial help, credit counseling can be a great resource to help you understand your financial situation and what it will take to get a mortgage, come up with a down payment and have monthly payments that fit your budget.

Counselors at nonprofit credit counseling agencies are required by law to act in your best interest, and will go over options that can help you get your finances into shape and put you in your dream home.