If you are looking to purchase a home in Florida, then there are several Florida first time home buyer down payment assistance programs available. In this article, we will discuss the different types of programs available, how they work, who qualifies and how to apply.
Understanding First Time Home Buyer Florida Down Payment Assistance
These Florida home buyer assistance programs offer 30-year fixed rate first mortgage loans to first time home buyers through participating lenders and lending institutions throughout the State of Florida.
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Down Payment Assistance In Florida
Florida Housing offers support to first time home buyers by helping with down payment and closing costs in the form of a second mortgage loan. This second mortgage loan is intended to be used together with Florida Housing’s first mortgage loan. Below are the available down payment assistance programs.
Florida Assist Second Mortgage Program (FL Assist)
If you are planning to buy a home in a particular county, then you may qualify for the Florida Assist Second Mortgage Program (FL Assist). This program is available to Florida residents seeking an FHA, VA, USDA, or Conventional loan. Eligible home buyers can receive up to $10,000, with no interest rate and no monthly payments. The program works by providing a deferred second mortgage, which means you don’t have to pay for it until the first mortgage is paid off.
Florida Homeownership Loan Program (FL HLP) Second Mortgage
If you’re planning to purchase a property in a selected county, then you may qualify for down payment assistance through the Florida Homeownership Loan Program (FL HLP) Second Mortgage. This program offers a fully-amortizing second mortgage with a 15-year term, up to $10,000, with a monthly payment of $69.06.
3%, 4% and 5% HFA Preferred and HFA Advantage PLUS Second Mortgage
Florida borrowers utilizing the state’s down payment and closing costs programs could be eligible to receive a forgivable second mortgage equivalent to 3%, 4%, or 5% of the total loan amount. This second mortgage is forgiven at a rate of 20% annually over a 5-year period when paired with Florida Housing’s conventional HFA Preferred for TBA or HFA Advantage for TBA first mortgage products.
Florida Hometown Heroes Housing Program
The Hometown Heroes program provide financial assistance to cover the down payment and closing costs when buying a home. Eligible borrowers could receive up to 5% of their total loan amount, which can be as much as $35,000. This program is only available to first time homebuyers looking to purchase a home in the Florida community where they are employed. The assistance could be used to cover expenses related to the down payment, closing costs, prepaid taxes, insurance escrows, and upfront mortgage insurance premiums.
FHA 100% Financing
This program provides homebuyers with 100% financing without requiring a down payment. However, closing costs are still required. This is achieved through a combination of a 1st and 2nd mortgage. This DPA program can be used to obtain an FHA loan and the amount of the 2nd mortgage can be up to 3.5% of the sales price or the ,appraised value whichever is less. The term for the 2nd mortgage is 10 years.
Eligibility for 100% FHA Financing
To qualify for the program, you need to have a minimum credit score of 620 and a maximum Debt-to-Income (DTI) ratio of 45%. You must complete a Homebuyer Education course. And the eligible properties for financing are defined by FHA guidelines based on the maximum HUD county limit. The program covers single-family homes, duplexes, manufactured homes, PUDs, townhouses, and condos.
Florida Mortgage Credit Certificate
The Florida Mortgage Credit Certificate (MCC) Program allows homeowners to claim a federal tax credit, which ranges from 10% to 50% of the mortgage interest deduction. Although the credit is capped at $2,000, any remaining mortgage interest not included as part of the Tax Credit is still eligible for the home mortgage interest deduction on their federal return. It’s important to note that Florida Housing no longer offers the Mortgage Credit Certificate Program. However, other local housing finance agencies within the State of Florida may still offer MCC programs.
How does the first time home buyer down payment program work?
Florida’s first time home buyer down payment program works by combining two types of loans to reduce the upfront costs of the purchase. The first component is a traditional 30-year mortgage from a participating lender, which works like most other mortgages and covers most of the home’s cost.
The second component is a second mortgage from Florida Housing Program designed to help with the down payment and closing costs. Furthermore, depending on the DPA program, you could either qualify for a forgivable or deferred second mortgage.
Who qualifies for down payment assistance in Florida?
Florida has several down payment assistance programs, and each program has its own set of eligibility requirements. However, there are some general criteria that you must meet to qualify. First, you need to be a first time home buyer or a first responder who meets the income and purchase price limits for the county where you are buying a home. Additionally, you must have a minimum credit score of 640. To determine your eligibility, it’s best to speak with a participating mortgage lender, who can verify your eligibility.
How to Apply for First Time Home Buyer Florida Down Payment Assistance Programs
- Work with Direct Mortgage Loans, a Florida Housing-approved lender, to get pre-approved.
- Take the Homebuyer Education class from an approved list provided by the lender.
- Choose a “certified” Realtor.
- Inform the real estate agent about your price range and preferences for your home search.
- Finalize your mortgage application with the pre-selected lender and provide the required documents promptly.
- Attend the loan closing with your attorney or real estate agent to sign and take ownership.
- Receive the keys to your new home and begin your homeownership journey. Congratulations!
Other Loan Options for Florida First Time Home Buyers
These loans are available in FHA, FHA 203(k), VA, Conventional and USDA formats.
FHA Loans
FHA loans are governed by HUD, offer flexibility for those with limited down payments and imperfect credit. Popular among first time home buyers due to lower credit score and down payment requirements.
FHA 203(k) Loans
These are special government-insured mortgages that finance both home purchase and renovations, providing a convenient single borrowing solution.
VA Home Loans
Are flexible, $0-down payment options partially backed by the Department of Veterans Affairs, benefiting veterans for purchasing or refinancing a home.
Conventional Loans
Conventional loans are not government backed mortgage loans. They are now accessible with down payment options as low as 3%, making them more attainable than before.
USDA Loans
Government-insured loans, designed for low- to moderate-income borrowers in rural areas to purchase homes within designated regions.
FAQ’s On First Time Home Buyer Florida Down Payment Assistance Programs
Who is considered a first time home buyer in Florida?
In Florida, a person who has never owned a home or has not owned and lived in a primary residence for the past three years before purchasing a new home is considered a first time home buyer.
How much money should I save before buying a house in Florida?
When planning to buy a house in Florida, figuring out how much money you need to save can depend on several factors. First, calculate the amount you need for the down payment and closing costs. Keep in mind closing costs can make up anywhere from 3-5% of your home purchase price. It’s also a good idea to have an emergency fund that covers 3-6 months of living expenses to handle unexpected repairs or emergencies after you buy the house. Additionally, researching home listings in the area where you want to live can help you understand home prices and assist with your financial planning.
What is the income limit for DPA in Florida?
The income limits for DPA in Florida vary depending on the down payment assistance program and the county. For instance, for the Hometown Heroes Program, the borrower’s earnings should not exceed 150% of the area median income (AMI). Income caps differ by county, ranging from $128,250 to $162,750. You can learn more about the specific income limits for each county here.
Do you have to pay back down payment assistance in Florida?
Different down payment assistance programs have varying requirements in Florida. For example, the HFA Preferred Grants program offers a grant that equals 3-5% of the purchase price, which doesn’t need to be repaid if you live in the home for at least five years.
On the other hand, the Florida Assist Second Mortgage Program (FL Assist) provides a deferred second mortgage of up to $10,000 with zero interest. But you need to repay it only if you sell your home, refinance it, or move out. Similarly, the Florida Homeownership Loan Program (FL HLP) also offers a second mortgage of up to $10,000 at a 3% interest rate, with monthly payments spread over 15 years. However, if you sell, refinance, or relocate, then the remaining balance becomes due.
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