Are you a first-time home buyer in Florida? There are things we thought you might need to know. With an overview of national home buyer programs that homebuyers in every state can access. It’s wise to consider both federal and state options when searching for the right mortgage. This article will dive into the programs for Florida residents.
First, homeownership can feel out of reach, especially if you have never bought a house and are not sure if you are going to qualify for a mortgage.
That is why Florida Housing Finance Corporation, known as Florida Housing, offers a number of programs to help Floridians buy their first home. But the good news is not stopping there.
Even if you don’t have much to set aside for a down payment, or you need a low-interest rate, these loans, and mortgage services are great options worth looking into.
Federal First-Time Home Buyer Programs
Before we delve into the programs for residents of Florida, we will give an overview of national home buyer services that homebuyers can access in every state. When searching for the right mortgage it is wise to consider all federal and state options.
– Low down payment requirements
– Don’t need a high credit score for approval
– Larger down payment needed for those with a credit score beneath 580
– As little as a 3.5% down payment
– Credit score must be 500 or above
– Those who don’t have a great credit history and money for a down payment
The U.S. federal government’s Federal Housing Administration is backing FHA loans, though you will actually apply for one through an external lender. These mortgages are a great option for anyone looking to buy a first home.
That’s because, at the time of purchase, you’ll only need to put 3.5 percent of the value of your new home. Compare this with a conventional loan requiring a down payment of 20 percent.
Nevertheless, you must have a FICO ® credit score of 580 or higher to earn the bonus in its full glory. If not, a 10 percent down payment will be expected, which still represents a partial improvement over a conventional mortgage.
– Can have up to 100% loan coverage of your home’s value
– Usually come with lower closing costs than conventional loans
– No private mortgage insurance
– The application process can be drawn out
– Must pay a VA funding fee
– Must be a current or former military member, or a member’s spouse or another eligible beneficiary
– Must have a credit score of 620 or higher
– Veterans with little monthly income and savings for a comfortable down payment
Department of Veterans Affairs insures VA loans but is actually issued by lenders of third party mortgages. These were designed to assist veterans who may have had sufficient monthly income to afford a mortgage, but not sufficient funds to back up an installment.
In addition, VA loans do not allow for any form of down payment, which means your mortgage will fully cover the value of your new home. This is nearly impossible to replicate outside a VA loan, making it even more persuasive to make a statement.
You need a 620 FICO ® credit score in most situations to secure approval for a VA loan. In addition, you need to pay a VA funding fee that ranges from 1.25 percent to 2.4 percent of the value of your home depending on whether or not you choose to pay a down payment.
In addition to the funding fee, there are virtually no other external costs to address on a VA loan. Indeed, you won’t have to pay the usual compulsory private mortgage insurance, as half of your exposure will be protected by the government.
You’ll also likely find that your closing costs will be higher than traditional and other mortgages, which will help you shore up your finances in the short term.
– Veterans with little monthly income and savings for a comfortable down payment
– If you qualify for a conventional mortgage, you can’t get one
– Adjusted household income generally can’t extend beyond 115% of the median income for the area
– Must purchase a home within an eligible rural area
– Low-to-mid income Americans looking to live in a rural or suburban area
A US Department of Agriculture, or USDA, is legally known as a “Section 502 Single Family Housing Guaranteed Loan Program.”
These mortgages are specifically designed to attract borrowers to move to rural (or at least semi-rural) areas of the country. Simply find a single-family home that is eligible for a loan approved by the USDA, and you’ll be free to apply.
Maybe the most attractive feature of this mortgage is the fact that it eliminates the need for an down payment altogether. But if your credit score is slightly lower on the FICO ® scale, you may have to pay about 10 percent down payment.
A USDA loan doesn’t allow borrowers to have a strong credit score and experience to make things even better. In order to pass approval for a USDA loan through the guaranteed loan program, the household income for the region you want to live in can not be more than 115 per cent of the median income.
Fannie Mae/Freddie Mac
– Very low down payment stipulations
– Little to no credit needed for approval
– Many loan styles available
– Could come with higher interest rates
– In some cases, no income requirements in under-served areas
– Anyone who is looking for a low down payment loan option, but doesn’t qualify for any of the above options
Freddie Mac and Fannie Mae are mortgage lenders that were created by the federal government, and each have a number of first-time home buyer options.
While they’re technically two different entities, they offer very similar benefits, each of which are more than suitable for anyone buying his or her first home.
The HomeReady® loan from Fannie Mae need only be accompanied by a 3% down payment. This makes it a great choice for anyone who’s strapped for cash, has a FICO® credit score as low as 620 and makes an income at or near the U.S. median.
With a HomeReady® loan, you must have private mortgage insurance at the time of purchase, but once you’ve accrued 20% equity in your new home, you can cancel it.
On the other hand, Freddie Mac offers Home Possible® mortgages with down payments as low as 3%. The Home Possible loan comes in 15- to 30-year fixed-rate and 5/5, 5/1, 7/1 and 10/1 adjustable-rate terms, along with the aforementioned cancellable private mortgage insurance.
– Minimal credit score requirements
– No down payment and no private mortgage insurance
– Cheap closing costs
– Limited group of eligible borrowers
– Home must be located on allotted lands, Alaska Native corporations, Pacific Island territories or federally-recognized trusts
– Native American veterans that lack money for a down payment
Native American veterans and their spouses can apply for their new home on a Native American Direct Loan (NADL). This VA-backed mortgage comes with lots of incentives, but most importantly it has a 0 percent down payment and interest rate package.
Removing the need for a down payment opens up homeownership for many more purchasers. Currently, this rate is 4.5 percent, although this is subject to change based on market movement and Prime Rate.
NADLs are calling for very little as far as credit conditions go, so don’t get discouraged if you have a weak credit history. You won’t have to buy private mortgage insurance as well, which is a perk that differs from regular VA loans.
In an effort to reduce the extra cost that closing costs can bring, the VA has significantly reduced certain NADL-related fees.
Florida State First-Time Home Buyer Programs
In addition to the programs available through the federal government, there are a few programs for first-time homebuyers offered through the state of Florida.
Florida HFA Preferred Conventional Loan Program
– Cheap mortgage insurance premiums
– Automatically qualifies borrower for an Assist Loan
– No direct down payment benefits
– Solely for first mortgages
– First-time home buyers looking to save on insurance
The Florida Housing Finance Corporation – HFA Preferred Conventional Loan is a 30-year fixed-rate mortgage that is great for anyone in need of cheaper private mortgage insurance for their new home.
In theory, this will leave you more financial room to take care of other fees, such as closing costs.
Although there is no direct down payment aid, you may qualify for the Florida Assist Loan. However, to get the Preferred Conventional Loan, it must be utilized as a first mortgage on a home.
Florida HFA Preferred 3% PLUS Conventional Loan Program
– Immediate qualification for HFA Preferred Grant helps shrink burden of down payment
– Lowered insurance costs
– Only comes as a 30-year loan
– Must be your first mortgage
– Anyone looking for down payment assistance
The 3 per cent PLUS traditional loan favored by Florida HFA is slightly different from its equivalent. This mortgage option comes with both lower mortgage insurance premiums and direct down payment assistance.
This will come as an HFA Recommended Grant that you won’t have to pay later. It is a loan with a fixed-rate of 30 years.
Similar to the loan described above, the HFA Preferred 3 per cent PLUS conventional loan must be the first mortgage of your home.
HFA Preferred Grant
– Doesn’t have to be repaid
– Can help you pay your down payment/closing costs
– Will not apply to all borrowers
– Must be applying for an HFA Preferred PLUS loan
– Those who want a bit of extra financial help
Although not a loan, the HFA Preferred Grant offers Florida residents an opportunity to receive essentially free financial aid. Grants need not be repaid and can be as large as 3 percent of the value of your home.
You can either position this grant against your down payment or closing costs.
While this comes with the Preferred 3 percent PLUS traditional loan, it will be a bit more difficult for other borrowers to apply for than most other mortgages.
Florida Assist Loan Program
– As much as $7,500 in down payment assistance
– Payments are deferred until first loan is paid off or it’s not your primary residence
– Will extend your repayment process longer than your original loan
– Must have an initial mortgage to apply this to
– Anyone who cannot afford a normal down payment
Florida provides Help Loan for further down payment help. This can total as much as $7,500 but, unlike the grant above, is required to be repaid.
However, there is no interest in this mortgage. Until either you refinance, pay off your first mortgage or the home loses priority as your primary residence, you will not be required to start making payments.
Although many mortgage applicants with any form of assistance are likely to be delighted, this loan will make the repayment cycle longer than it would be for just your first loan. You’ll still be ineligible for the Help Loan unless you have a first mortgage.
Florida Military Heroes Program
– Low-interest rates
– Borrowers qualify for the Assist Loan program
– Limited applicant qualifications
– Must be active-duty military or a veteran
– Can only be a first mortgage
– U.S. military members
The Florida Military Heroes program allows special mortgage deals for those currently in the military and for veterans. Above all, they are combined with interest rates that are significantly lower than typical home loans.
However, you will also qualify for the Assist Loan, which will provide down payment assistance in the form of a mortgage of up to $7,500 seconds.
They do not apply to the vast majority of the Florida population because of the military-centric nature of those loans. A loan from the Military Heroes can also be for a first mortgage only.
Florida Housing Mortgage Credit Certificate Program
– Can reduce your federal taxes up to $2,000/year from mortgage interest paid
– Limited qualifications
– Most first-time home buyers will qualify
– Those who are happy with their loan, but want to save on taxes
A Florida Housing Mortgage Credit Certificate is not a direct mortgage program but it will help home buyers and some veterans save on their annual federal income tax based on how much they pay in interest on mortgages. This is limited to up to $2,000 a year, as you can claim from 10 per cent to 50% of your interest payments for the year anywhere.
Florida Housing Highlights and Eligibility
30-year fixed-rate mortgages for first-time home buyers, veterans and active military
Available in all 67 of Florida’s counties
Can be combined with down payment or closing cost assistance programs
Mortgage interest tax credit available
First- and second-mortgage programs available
Special programs available for veterans and military members
Special programs available for borrowers purchasing in Hurricane Michael-affected counties
The property must be located in Florida and be a primary residence
Borrowers must meet income, credit and purchase price requirements
Homebuyer education course required
You must be a first-time homebuyer (except for the Military Heroes program) purchasing a primary residence.
You must complete an FHFC-approved Homebuyer Education Class.
Additional program-specific requirements may apply
You must have the appropriate FICO credit score for the loan program you’ve chosen.
Florida Housing First-Time Home Buyer Loan Programs and Grants
If you’re a home buyer for the first time— typically someone who hasn’t owned a home in the past three years— Florida Housing programs can provide an affordable way to own a home.
Qualified veterans and anyone considering buying a home in one of the federally designated target areas of Florida may also be able to take advantage of the programs.
Designated by the United States; A targeted area of the Department of Housing and Urban Development is a neighborhood, street or block where at least 70 percent of households earn 80 percent or less of the median state income.
Florida HFA Preferred Grant
This program offers closing cost assistance of either 3% or 4%, depending on which loan HFA Preferred Loan Program you’re using. The funds do not need to be repaid.
The Florida Assist program offers buyers up to $7,500 in closing cost and down payment assistance. The funds function as a zero-interest, second mortgage and must be repaid upon selling or refinancing the property.
Florida Homeownership Loan Program Second Mortgage
Under the HFA’s HLP Second Mortgage Program, borrowers can receive up to $10,000 in down payment and closing cost assistance. The loan comes with a 3% interest rate, and buyers will pay down their balance monthly over 15 years.
Florida HFA Preferred 3% Plus Conventional Loan
In addition to getting reduced mortgage insurance costs, borrowers who qualify for this 30-year fixed-rate loan can take advantage of Florida Housing’s 3% down payment and closing cost grant, which doesn’t have to be repaid.
Hurricane Michael Recovery Loan
This program offers up to $15,000 of zero-interest funds to be used toward down payment and closing costs.
It’s only available to qualified buyers in Hurricane Michael-affected counties. The funds do not need to be repaid, as long as you stay in the home at least five years.
Additional Eligibility Requirements
You must be buying a house in Bay, Calhoun, Franklin, Gadsden, Gulf, Holmes, Jackson, Liberty, Taylor, Wakulla, or Washington County.
Florida Housing Mortgage Credit Certificate Program
Through Florida’s Mortgage Credit Certificate Program, you can reduce your annual tax liability based on the total mortgage interest you pay. Save up to 50% dollar-for-dollar or up to $2,000, whichever is lowest.
1. Where are the best places to live in Florida?
Follow this link to see a statistical analysis of the best places to live in Florida
2. Who qualifies as a first-time homebuyer?
If you’ve never bought a home before, you qualify as a first-time home buyer. However, according to the FHA and many lenders – as well as many first-time buyer down payment assistance programs – you can still qualify as a first-time buyer if you have not owned a primary residence for at least three years.
3. What should first-time homebuyers know about mortgages?
As a first-time homebuyer, you need to know that not all mortgages are created equal. Different lenders offer different loan products, and each has its own requirements for qualifying a borrower; some lenders may allow you to borrow with a credit score of 540, for example, while another requires a minimum score of 620.
4. What is the best mortgage for a first-time buyer?
There are thousands of mortgage loan products available, so as a first-time buyer, it’s a good idea to shop around for one that fits your needs best.
Your lender should be able to offer you several options based on your credit score and the amount you want to borrow; if you don’t have a preferred lender, you can ask your real estate agent to refer you to someone or you can find one on your own.
5. Are FHA loans only for first-time buyers?
Loans backed by the Federal Housing Administration are available to everyone, not just first-time home buyers. The 3.5 percent down payment program is available to all buyers, as well. However, there are some FHA programs designed specifically for first-time buyers.
Under FHA guidelines, you qualify as a first-time home buyer if you have never owned a primary residence or if it has been three years since the last time you owned a primary residence; there are even exceptions to the first-time buyer rule, such as when you divorce or when you owned a home that wasn’t attached to a foundation.
If it seems too far out of reach to buy a home you have options. First-time home buyer programs in Florida can help lower the initial cost of buying a home, as well as your monthly mortgage costs for the rest of the loan. Federal aid programs can also help to lighten the load.
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