Florida’s First-Time Homebuyer Assistance Programs for 2022
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Photo courtesy of floridahousing.org
Are you a first-time homebuyer in Florida ready to pursue your dream of homeownership, but financial obstacles keep getting in the way? We get it.
Saving enough cash for a hefty down payment can be difficult after paying rent and other monthly expenses. And perhaps you haven’t even tried saving because your less-than-stellar credit score has you thinking you wouldn’t qualify for a mortgage in the first place. But don’t lose hope just yet.
The Florida Housing Finance Corp., also known as Florida Housing, might be able to help make your homeownership dream a reality. The corporation exists to provide new homebuyer assistance in Florida by providing down payment and closing costs help.
So here’s a breakdown of all the programs that can help pave the way to your buying a home.
Florida homebuyer loan program basics
The Florida state legislature created financial programs such as Florida Housing to assist eligible first-time homebuyers. The state doesn’t approve loans or hand out money. Instead, Florida works with participating lenders to offer homebuyers Federal Housing Administration, Department of Veterans Affairs, Department of Agriculture, and Fannie Mae and Freddie Mac loans with 30-year fixed-rate first mortgage loans.
Once approved for one of these loans, eligible borrowers can reap even more financial help with Florida Housing down payment and closing cost assistance programs (more on that below).
And here’s the icing on the cake: Florida Housing never runs out of funds, so you don’t have to worry about competing with other borrowers for limited money.
Eligibility requirements
You might be wondering what kind of hoops you have to jump through to qualify for Florida Housing assistance. First and foremost, you must be considered a first-time homebuyer. The IRS (and Florida) defines a first-time buyer as someone who has not owned and occupied a primary residence for three years before a new home purchase.
Here’s the nitty-gritty on the rest of the requirements:
- Credit score: Borrowers must have a minimum credit score of 640. If your credit score is below 640, there are ways to boost your score.
- Income: Your income must be below the limits for the county where you wish to buy a home.
- Purchase price: The cost of the home you want to buy must be below the price limit, which varies by county. “The threshold is typically around $300,000 and sometimes increases as the median prices within the respective county increase,” says Ashla Johnson, an agent with Compass in Boca Raton. However, if you purchase a home in a federally designated target area (an area of slow economic growth), there may be a higher limit of the purchase price.
- Eligible property: These include single-family homes, townhomes, multiunit homes of two to four units (you must live in one of the units), approved condos, and modular or mobile homes.
- Homebuyer education course: Borrowers must complete a HUD-approved homebuyer education course. The class covers topics including the financial and practical aspects of buying and maintaining a home, budgeting for home expenses, and a guide to closing documents. Classes are typically offered online or in-person and conducted by a HUD-approved counselor.
- Approved lender: While you must work with a lender who participates in the program, don’t pick just any lender. “The conditions may differ from one mortgage lender to another, as each of them has their own income and credit rules to qualify for a loan,” says Jill Gonzalez, an analyst with WalletHub. “This is why you should ask around at different banks and credit unions about rates, mortgage insurance, closing costs, and other fees that might occur.”
Salute Our Soldiers
The Salute Our Soldiers Military Loan Program is available to all qualified veteran and active-duty military personnel who meet the program’s income and purchase price limits.
The loan offers a 30-year fixed rate for FHA, VA, and USDA mortgages. And borrowers can combine the benefits of this program with other down payment and closing cost assistance programs below.
Down payment and closing cost assistance programs
Florida Housing also offers eligible buyers the following programs, but they aren’t available as stand-alone products. You must first qualify for a conventional mortgage to qualify for down payment assistance in Florida.
Florida Assist: With Florida Assist, or FL Assist, qualifying borrowers can receive up to $7,500 at 0% interest on a deferred second mortgage. This money can be put toward a down payment on a conventional loan. And borrowers who get an FHA, VA, or USDA loan could receive up to $10,000.
To be clear, FL Assist is not forgivable. Instead, repayment comes due in total if you sell the home, move, transfer the deed to someone else, or refinance the mortgage.
The Florida Homeownership Loan Program: The Florida Homeownership Loan Program, or FL HLP, offers up to $10,000 as a fully amortizing, second mortgage at 3% interest over a 15-year term. Since FL HLP requires a monthly payment, the lender considers a borrower’s debt-to-income ratio before approval.
If you receive this funding and later sell the house, transfer the deed, refinance, or move off the property, you must pay this mortgage in full.
HFA Preferred or HFA Advantage PLUS: With this program, qualified buyers can receive 3%, 4%, or 5% of the total first mortgage amount to use toward a down payment and/or closing costs. The money is a second mortgage that’s forgiven at 20% per year over a five-year term.
Buyer assistance by county
In addition to government and state programs, some Florida counties offer assistance for first-time homebuyers.
For example, Jacksonville has a Head Start to HOME Ownership Program, or H2H, which gives down payment and closing cost assistance to eligible first-time borrowers. Just keep in mind this program also comes with a few drawbacks.
“The buyer has to present the seller with a pre-contract for approval before signing a sales contract,” says Tamara Harris, an agent at Midtown Realty Group in Jacksonville. “Secondly, the program has its own inspectors, and as there are only two H2H inspectors, this could cause some possible delays depending on scheduling.”
Still, a few hurdles might be worth the hassle for the financial aid you receive in the end. So check out your county’s website to see if it offers programs for first-time homebuyers.
How to get started
Although we covered the basics here, finding the right program can still be an intimidating and daunting process. But the Florida Housing Homebuyer Loan Program Wizard can help.
The tool can assist you with eligibility requirements, income, and price limits. It also provides a list of approved real estate agents and lenders for your area. And once you secure a lender, the process is relatively straightforward.
“Most of the work is done on the back end with the lender,” says Johnson. “So it’s not typically difficult to make an offer and close on a house.”
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