Florida First-Time Home Buying Assistance Programs & Grants for 2022

Florida First-Time Home Buying Guide

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    By Walecia Konrad

    (Last Updated – 06/2022)

    Florida’s ever-growing population, robust job growth, and new industries all make for a hot real estate market. This year is no exception.

    Home prices increased 23% in a year to a median sales price of $400,500 in April, according to the real estate firm Redfin. The biggest jumps were seen in Bonita Springs (56%) and Lauderhill (54%).

    In April new home sales dropped 17% from the same time last year. The combination of fewer homes for sale and higher prices can put a squeeze on first-time buyers, who don’t have the luxury of using the equity in their existing home for a new home down payment.

    But buyers who qualify based on income and other things can catch a break.

    6 Florida Programs for First-Time Homebuyers

    The Florida Housing Finance Corporation offers a menu of savory choices.

    First-time buyers partaking of the programs will need to complete homebuyer education classes. This can help buyers understand how much mortgage they can afford and how the lending and closing processes work.

    Here are details of the programs.

    1. Florida First

    This program offers 30-year fixed-rate FHA, VA, and USDA government-backed loans as well as conventional loans that can be paired with Florida Housing’s down payment assistance second mortgages. (See below.)

    The housing finance agency conventional loans may have lower mortgage insurance premiums than the federal government loans. Single-family homes, townhomes, approved condos, two- to four-unit homes with the buyer residing in one of the units, modular homes, and mobile homes are allowed.

    Buyers must have a credit score of at least 640 and meet the income and purchase price limits in the county where the home is located.

    2. Florida Assist Second Mortgage

    This program offers up to $10,000 for down payment and closing costs via a 0% interest deferred second mortgage to be used only with a Florida Housing first mortgage.

    The second loan is not forgivable, but repayment is deferred until the home is sold, the borrower moves, or the first mortgage is refinanced. Borrowers must meet the same requirements as they do for the Florida First mortgage.

    3. HFA Preferred and HFA Advantage Plus Second Mortgage

    These forgivable second mortgages allow participants to borrow 3%, 4%, or 5% of the total loan amount for down payment and closing costs. There are no payments, and the loan is forgiven at 20% a year over a five-year term.

    4. FL HLP Second Mortgage

    The Florida Homeownership Loan Program (FL HLP) offers a loan up to $10,000 for down payment and closing costs with a 3% interest rate. The loan is paid over a 15-year term, unless the borrower moves, sells, or refinances, at which time the loan must be paid back in full.

    Because there is a monthly payment associated with this loan, it will be considered in an applicant’s debt-to-income ratio when applying for a first mortgage.

    5. Local Homebuyer Assistance Programs

    Community workers such as law enforcement officers, firefighters, EMTs, educators, health care professionals, and child care operators or employees can receive up to 5% of the first mortgage amount in down payment and closing cost assistance if they are first-time homebuyers who meet income and purchase price limits and have a credit score of at least 640.

    Military members and veterans are also eligible, and are exempt from the first-time homebuyer requirement.

    The assistance takes the form of a 0% interest, 30-year deferred second mortgage that must be repaid if the borrower sells the home, moves, or refinances the first mortgage.

    Hometown Heroes also offers lower-than-market rates on an FHA, VA, USDA, Fannie Mae or Freddie Mac first mortgage and reduced upfront fees.

    6. Local Homebuyer Programs

    There are some city and area-specific homebuyer programs in areas such as Jacksonville that help first-time buyers in Florida. Be sure to check with the county, city, and local home advocacy organizations where you are buying for other assistance opportunities. The U.S. Department of Housing and Urban Development (HUD) lists contacts by state, region, and county .

    Recommended: Understanding the Different Types of Mortgage Loans

    Who Is Considered a First-Time Homebuyer in Florida?

    The Florida Housing Finance Corporation is a 40-year-old state agency that provides affordable housing opportunities to first-time and low- to moderate-income homebuyers looking for their place in the Sunshine State.

    It considers anyone who has not owned a primary home in the past three years a first-time homebuyer.

    In some targeted areas of the state, repeat buyers may also apply for first-time homebuyer programs. And typically veterans need not be first-time buyers.

    How to Apply to Florida Programs for First-Time Homebuyers

    The Florida Housing website includes the Homebuyer Loan Program Wizard, an interactive tool that can help you determine your eligibility for Florida first-time homebuyer programs. Florida Housing is not a lender, but the Wizard tool provides a list of approved lenders by location.

    It is especially important for first-time buyers, who may be unfamiliar with the mortgage lending process, to compare interest rates, fees, and other costs among lenders to find the most affordable loan.

    Recommended: The SoFi Guide to First-Time Home Buying

    Federal Programs for First-Time Homebuyers

    Several federal government programs are designed for people who have low credit scores or limited cash for a down payment. Although most of these programs are available to repeat homeowners, like state programs, they can be especially helpful to people who are buying a first home or who haven’t owned a home in several years.

    The mortgages are generally for single-family homes, two- to four-unit properties that will be owner occupied, approved condos, townhomes, planned unit developments, and some manufactured homes.

    If you qualify for one of these loans through Florida Housing, that’s advantageous. If not, you can apply for them on your own. Notice that the credit score requirement could be higher with Florida Housing.

    Federal Housing Administration (FHA) Loans

    The FHA, which is part of HUD, insures mortgages for borrowers with lower credit scores. Homebuyers choose from a list of approved lenders that participate in the program. Loans have competitive interest rates and require a down payment of 3.5% of the purchase price for borrowers with FICO® credit scores of 580 or higher. Those with scores as low as 500 must put at least 10% down.

    Gift money for the down payment is allowed from certain donors and will be documented in a gift letter for the mortgage.

    FFHA loans always require mortgage insurance: a 1.75% upfront fee and annual premiums for the life of the loan, unless you make a down payment of at least 10%, which allows the removal of mortgage insurance after 11 years.

    You can learn more about FHA loans in general and FHA lending limits by area.

    Freddie Mac Home Possible Mortgages

    Very low- and low-income borrowers may make a 3% down payment on a Home Possible® mortgage. These loans allow various sources for down payments, including co-borrowers, family gifts, employer assistance, secondary financing, and sweat equity.

    The Home Possible mortgage is for buyers who have a credit score of at least 660.

    Once you pay 20% of your loan, the Home Possible mortgage insurance will be canceled, which will lower your mortgage payments.

    Fannie Mae HomeReady Mortgages

    Fannie Mae HomeReady® Mortgages allow down payments as low as 3% for low-income borrowers. Applicants generally need a credit score of at least 620; pricing may be better for credit scores of 680 and above. Like the Freddie Mac program, HomeReady loans allow flexibility for down payment financing, such as gifts and grants.

    For income limits, a comparison to an FHA loan, and other information, go to this Fannie Mae site .

    Fannie Mae Standard 97 LTV Loan

    The conventional 97 LTV loan is for first-time homebuyers of any income level who have a credit score of at least 620 and meet debt-to-income criteria. The 97% loan-to-value mortgage requires 3% down. Borrowers can get down payment and closing cost assistance from third-party sources.

    Department of Veterans Affairs (VA) Loans

    Active-duty members of the military, veterans, and eligible family members may apply for loans backed by the Department of Veterans Affairs. VA loans , to buy, build, or improve homes, have lower interest rates than most other mortgages and don’t require a down payment. Most borrowers pay a one-time funding fee that can be rolled into the mortgage.

    Native American Veteran Direct Loans (NADLs)

    Eligible Native American veterans and their spouses may use these no-down-payment loans to buy, improve, or build a home on federal trust land. Unlike VA loans listed above, the Department of Veterans Affairs is the mortgage lender on NADLs. The VA requires no mortgage insurance, but it does charge a funding fee.

    U.S. Department of Agriculture (USDA) Loans

    No down payment is required on these loans to moderate-income borrowers that are guaranteed by the USDA in specified rural areas. Borrowers pay an upfront guarantee fee and an annual fee that serves as mortgage insurance.

    The USDA also directly issues loans to low- and very low-income people. For loan basics and income and property eligibility, head to this USDA site .

    HUD Good Neighbor Next Door Program

    This program helps police officers, firefighters, EMTs, and teachers qualify for mortgages in the areas they serve. Borrowers can receive 50% off a home in what HUD calls a “revitalization area.” They must live in the home for at least three years.

    Florida First-Time Homebuyer Stats for 2022

    Here’s a snapshot of Florida homebuyers, according to the 2021 National Association of Realtors® Profile of Buyers and Sellers: Florida Report.

    •  Percentage of first-time homebuyers in Florida: 23%, compared with 34% nationally

    •  Florida first-time buyers typically finance 94% of their home purchase, compared with 81% for repeat buyers

    •  Biggest obstacle to saving for a home for first-time buyers: Student debt

    •  Typical age of homebuyer in Florida: 57, vs. 47 nationally

    •  Median income of a Florida homebuyer: $95,900, compared with $102,000 nationally

    •  Why are you purchasing a home? In Florida 24% of buyers answered the desire to own a home of their own, compared with 28% nationally.

    Financing Tips for First-Time Homebuyers

    In addition to federal and state government-sponsored lending programs, there are other financial strategies that may help you become a homeowner. Some examples:

    •  Traditional IRA withdrawals. The IRS allows qualifying first-time homebuyers a one-time, penalty-free withdrawal of up to $10,000 from their IRA if the money is used to buy, build, or rebuild a home. The IRS considers anyone who has not owned a primary residence in the past three years a first-time homebuyer. You will still owe income tax on the IRA withdrawal. If you’re married and your spouse has an IRA, they may also make a penalty-free withdrawal of $10,000 to purchase a home. The downside, of course, is that large withdrawals may jeopardize your retirement savings.

    •  Roth IRA withdrawals. Because Roth IRA contributions are made with after-tax money, the IRS allows tax- and penalty-free withdrawals of contributions for any reason as long as you’ve held the account for five years. You may also withdraw up to $10,000 in earnings from your Roth IRA without paying taxes or penalties if you are a qualifying first-time homebuyer and you have had the account for five years. With accounts held for less than five years, homebuyers will pay income tax on earnings withdrawn.

    •  401(k) loans. If your employer allows borrowing from the 401(k) plan that it sponsors, you may consider taking a loan against the 401(k) account to help finance your home purchase. With most plans, you can borrow up to 50% of your 401(k) balance, up to $50,000, without incurring taxes or penalties. You pay interest on the loan, which is paid into your 401(k) account. You usually have to pay back the loan within five years, but if you’re using the money to buy a house, you may have up to 15 years to repay.

    •  State and local down payment assistance programs. Usually offered at the regional or county level, these programs provide flexible second mortgages for first-time buyers looking into how to afford a down payment.

    •  The mortgage credit certificate program. First-time homeowners and those who buy in targeted areas can claim a portion of their mortgage interest as a tax credit, up to $2,000. Any additional interest paid can still be used as an itemized deduction. To qualify for the credit, you must be a first-time homebuyer, live in the home, and meet income and purchase price requirements, which vary by state. If you refinance, the credit disappears, and if you sell the house before nine years, you may have to pay some of the tax credit back. There are fees associated with applying for and receiving the mortgage credit certificate that vary by state. Often the savings from the lifetime of the credit can outweigh these fees.

    •  Your employer. Your employer may offer access to lower-cost lenders and real estate agents in your area, as well as home buying education courses.

    •  Your lender. Always ask your lender about any first-time homebuyer grant or down payment assistance programs available from government, nonprofit, and community organizations in your area. Recommended: Six Simple Ways to Reduce a Mortgage Payment

    The Takeaway

    Some first-time homebuyers in the Sunshine State will be able to weather the hot market with assistance from Florida Housing. Other Florida buyers may turn to government-backed or conventional loans on their own.

    Make your dream of being a homeowner come true with SoFi’s competitive mortgage rates and down payments as low as 3% for qualifying first-time homebuyers.

    View your rate


    FAQ

    Should I take first-time homebuyer classes?

    Yes. Good information is key to a successful home-buying experience for anyone, but especially for newcomers, who can easily be overwhelmed by the jargon, technicalities, and magnitude of applying for a mortgage and purchasing a home. First-time homebuyer classes can help. Indeed they are required for most government-sponsored loan programs.

    Do first-time homebuyers with bad credit qualify for homeownership assistance?

    Many government and nonprofit homeowner assistance programs are available to people with low credit scores. That said, almost any lending program has credit qualifications.

    Is there a first-time homebuyer tax credit in Florida?

    There is a first-time homebuyer mortgage tax credit certificate program in Florida, but Florida Housing does not participate. Some local housing finance agencies may still offer programs for annual tax credits for up to $2,000 in mortgage interest paid.

    Is there a first-time veteran homebuyer assistance program in Florida?

    Yes. The new Hometown Heroes Housing Program provides reduced-rate first mortgages and 0% interest deferred second mortgages for a down payment or closing costs. Military members and vets need not be first-time buyers.

    Florida veterans may also may find options in the federal Department of Veterans Affairs and Native American Veteran Direct Loan programs listed above.

    What credit score do I need for first-time homebuyer assistance in Florida?

    Programs administered by the Florida Housing Finance Corporation require a credit score of 640.

    What is the average age of first-time homebuyers in Florida?

    The typical age of homebuyers in Florida is 57, compared with 47 nationally. It’s not clear what the average age of first-time homebuyers is in Florida, but the average age nationally is 33.


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