Florida First Time Home Buyer Guide

In the last decade, Florida’s population has surged, increasing by more than 2.6 million people. This remarkable demographic shift ranks Florida as the second-highest state in the country in terms of numerical population growth, second only to Texas. Given this substantial population influx, it’s unsurprising that Florida’s housing market is experiencing considerable expansion, resulting in rising property values.

While the housing market faced challenges during the pandemic, Florida, like many other regions, is now showing promising signs of recovery, making it an attractive destination for homebuyers. This appeal is particularly pronounced for first-time homebuyers, regardless of their specific circumstances.

Purchasing a home is a momentous decision that brings with it a plethora of intricate financial terms and concepts. However, for first-time homebuyers in Florida, dedicating time to understand the market and explore available programs could lead to securing an excellent deal on their very first home. Our aim is to assist these prospective first time home buyers in comprehending the Florida real estate landscape and identifying potential home buying grants and down-payment assistance programs tailored to their needs.

Florida First-Time Home Buyer Loan Options

Unless you and your family are financially well-off, the most likely scenario is that you’ll require a home loan, commonly referred to as a mortgage.

These Florida first time home loans for aspiring homeowners generally fit into one of two main categories: conventional and government-backed.

It’s important to note that not everyone will meet the eligibility criteria for both types of home loans.

Some first-time home buyers might even qualify for multiple loan options, necessitating a decision about which one is most suitable for their particular circumstances.

Conventional Mortgages

• Financed entirely by private banks or financial companies
• Typically comes with a lower interest rate, but a better credit score often secures even lower rates
• Usually mandates a down payment, which can range from as low as 5% to as much as 20%
• Buyers must possess a minimum credit score of around 640, although this requirement can vary significantly depending on the lender
• See if you are eligible for HELOC and home equity loans in Florida after closing your first home loan.

Government-Mortgage Loans

• Originates from a private bank or lender but is supported by a state or federal agency, often one of the three major agencies — the Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), or U.S. Department of Agriculture (USDA). Eligibility criteria differ by agency, with terms and loan limits also varying depending on the property’s location, either county or city
• Many programs permit buyers to provide a smaller down payment, potentially as low as 3.5%, although this can also be influenced by credit scores
• Interest rates on these loans tend to be higher compared to conventional loans
• Minimum required credit scores are lower, though individuals with scores below 580 generally need to make a larger down payment
• Congress rose loan limits on FHA for 2024

Repayment options

Regardless of the entity backing it, the most prevalent form of home loan remains the conventional 30-year fixed-rate mortgage loan. It’s estimated that approximately 90% of U.S. homebuyers opt for this type of mortgage. However, various alternatives exist, and the most suitable one for you largely depends on your specific circumstances and plans.

Adjustable-Rate Mortgage (ARM): With ARMs, the initial phase of the loan features a fixed interest rate. Still, after a predetermined period or when a specified marker or metric, usually tied to the passage of time, is met, the interest rate adjusts. Following this adjustment, the interest rate generally increases significantly, leading to a higher monthly payment for the homeowner who continues to reside in the house. ARMs can be advantageous for those who intend to relocate before the rate adjustment, potentially saving money during the initial phase of the loan.

5/1 ARM: This variant involves a 30-year mortgage, with the buyer paying a fixed interest rate for the first five years. Afterward, the rate fluctuates annually, tethered to an economic index. This may result in lower payments under certain conditions but typically leads to an annual rise in the borrower’s mortgage payment. Once again, this loan is a suitable choice for individuals planning to sell their homes within the initial five-year period. However, it can be risky if circumstances change.

15-Year Mortgage: Largely akin to the standard 30-year mortgages, 15-year mortgages can come with either fixed or variable rates. The key distinction is that the total loan duration is halved. For borrowers weighing the choice between a 15-year and 30-year fixed-rate mortgage, the decision often translates to savings amounting to thousands of dollars in interest costs. This benefit comes at a cost, though, as it essentially doubles the monthly mortgage payment. The 15-year mortgage loan is a fitting option for those purchasing homes that are exceptionally affordable relative to their income.

Other terms to know

The down payment, principal, and mortgage interest represent just a portion of the financial considerations you must grasp to maximize your real estate investment. Let’s delve into some correlated terms that are essential for Florida homebuyers to comprehend.

Mortgage Insurance: Typically, this becomes a requirement when the buyer contributes less than 20% of the down payment. It ceases once the house’s value surpasses the outstanding loan amount by more than 20%. Lenders are legally obligated to discontinue private mortgage insurance when the loan balance reaches 78% of the initial purchase price or when the buyer completes the 15th year of a 30-year mortgage. Find out if getting a HELOC in Florida with your first mortgage enables you to bypass the mortgage insurance requirement.

Equity: Equity signifies the difference between your home’s value and any remaining mortgage balance. For instance, if your home is appraised at $150,000, and your outstanding loan is $70,000, your equity in the property amounts to $80,000. Typically, equity becomes pertinent when selling or refinancing your home. This underscores the significance of making a substantial down payment, whenever feasible. As one of the most substantial investments you’re likely to make, your home’s equity accumulates over time. You can augment your equity through two primary means: paying down your loan and enhancing your home’s value. Real estate generally appreciates over time, although market conditions can occasionally lead to depreciation.

Closing Costs: Both buyers and sellers are expected to shoulder one-time expenses, generally ranging from 3% to 7% of the home’s purchase price. In Florida, these costs encompass a range of expenses such as lender fees, real estate commissions, title fees, inspections, and various other charges.

How to Qualify for First-Time Homebuyer Programs in Florida

Purchasing your first home in Florida can feel overwhelming, but first-time homebuyer programs offer significant support through lower down payments, reduced mortgage rates, and assistance grants. Understanding how to qualify for these programs is essential to making the most of the resources available. Let’s explore the steps you need to follow to qualify for first-time homebuyer assistance in Florida.

1. Confirm First-Time Buyer Eligibility
In Florida, you are considered a first-time homebuyer if you haven’t owned a home in the past three years. This eligibility extends to people who may have owned a property previously but are now returning to the market after renting. Some programs also cater to veterans and public service workers, offering special loan terms or additional grants.

Programs like the Florida Housing Finance Corporation’s (FHFC) First Time Homebuyer Program provide access to affordable financing options such as FHA and USDA loans, making it easier to enter the housing market with minimal initial investment​.

2. Meet Income and Credit Requirements
To qualify, you’ll need to meet specific income limits based on your household size and the county where the home is located. These income caps ensure the program benefits those with low to moderate incomes. Additionally, most lenders will expect a minimum credit score of 620 or higher for FHA loans, though some programs may allow lower scores if you meet other eligibility criteria​.

3. Participate in a Homebuyer Education Program
Many Florida first-time homebuyer programs require applicants to complete a homebuyer education course before receiving assistance. These courses provide essential information about managing finances, understanding mortgage terms, and the responsibilities of homeownership. Completing this course is not just a requirement—it also ensures you are well-prepared to maintain your investment and avoid future financial pitfalls.

4. Secure Financing through an Approved Lender
You must work with a participating lender approved by Florida Housing to access first-time homebuyer programs. These lenders will guide you through the application process, verify your income, and assess your financial documents. Programs such as FHA loans, which are backed by the government, are common options for first-time buyers due to their low down payment requirements and accessible terms.

5. Confirm Property Eligibility
The home you intend to purchase must meet the eligibility requirements set by the U.S. Department of Housing and Urban Development (HUD) or the USDA, depending on the loan type. Many programs restrict assistance to primary residences only, meaning the property must be your primary home rather than a vacation house or rental property.

Qualifying for first-time homebuyer programs in Florida requires a combination of financial preparation and education. From meeting income limits to working with approved lenders, understanding these steps will help you make the most of available opportunities. With government-backed programs and financial assistance from Florida Housing, becoming a homeowner is more achievable than you might think.

What is the Florida Homeownership Program?

The Florida Homeownership Program offers eligible borrowers a second mortgage loan of up to $10,000 with a 3% fixed interest rate and a repayment term of 15 years. The mortgage loan balance must be fully repaid if the property is sold, refinanced, or if ownership changes hands during the loan period. The Florida Homeownership Program aims to assist with down payments and closing costs, helping make homeownership more accessible to Florida residents.

Florida’s Down Payment Assistance Programs for 1st Time Home Buyers

Florida offers a wide variety of home buying grants to assist first-time homebuyers with down payment support, closing costs, and homeownership education. These Florida down payment assistance programs were created to make buying a home more affordable, with different programs targeting various counties and cities across the state.

State Housing Initiatives Program (SHIP)
Managed by the Florida Housing Finance Corporation (FHFC), SHIP distributes funds to counties and cities across Florida. These funds are used for down payment assistance, closing cost support, and homeownership counseling. Contact your local government for details on SHIP programs in your area.

HOME Homebuyers Program (Escambia County)
This program provides up to $12,500 in deferred loans for down payment assistance and closing costs. Eligible homes must be built after 1978 and located within Escambia County or Pensacola city limits.

Pensacola Homebuyer Incentive Program
This initiative provides up to $30,000 in 0% loans for low- to moderate-income families purchasing homes within Pensacola.

Down Payment Assistance Program (Gainesville)
Offering up to $15,000 as a forgivable loan, this program requires homeowners to maintain the property as their primary residence for at least five years to qualify for loan forgiveness.

Homebuyer Assistance Program (Volusia County)
Volusia County provides up to $44,000 for down payment assistance and $6,000 for closing costs through a deferred loan. Eligible properties must be located outside Daytona Beach or Deltona.

Down Payment Assistance Program (Orange County)
First-time buyers can access up to $45,000 in down payment assistance through this program. The loan must be repaid if the property is sold or rented before the 10-year deferred loan period ends.

Tampa CRA Down Payment Assistance Program
This initiative provides up to $50,000 in zero-interest first time buyer loans for homes within the East Tampa Community Reinvestment Area, forgivable after seven years of occupancy.

How to Apply for First-Time Homebuyer Programs in Florida

Buying a home for the first time is a significant milestone, but it can also feel overwhelming. Fortunately, Florida offers several programs to assist first-time homebuyers with financing, down payments, and closing costs. Whether you’re drawn to the state for its sunny weather or vibrant communities, understanding the process can help you move closer to your dream of homeownership. Here’s a step-by-step guide to applying for Florida’s first-time homebuyer programs, with tips to make the process smoother.

1. Assess Your Eligibility
Many first-time homebuyer programs in Florida require applicants to meet specific income limits, credit score minimums, and property location criteria. In some cases, you don’t need to be purchasing your first home ever—if you haven’t owned a home in the past three years, you may still qualify as a first-time buyer. Additionally, your income should not exceed the program’s set limit for your county to remain eligible.

The Florida Housing Finance Corporation (FHFC) offers programs like down payment assistance and reduced mortgage rates. These benefits are often geared toward low- to moderate-income buyers and can provide a significant financial boost when closing on your home​.

2. Get Pre-Approved for a Competitive First Time Home Buyer Loan
Securing a pre-approval letter from an FHA-approved lender helps you understand how much you can borrow. It also makes you more appealing to sellers, who see pre-approval as a sign of seriousness. Florida’s first-time buyer programs often recommend loans insured by the Federal Housing Administration (FHA) or the U.S. Department of Agriculture (USDA) for lower interest rates and reduced down payment requirements .

3. Choose a Program and Florida Mortgage Lender
The Florida Housing First Time Homebuyer (FTHB) Program offers 30-year, fixed-rate FHA, VA, and USDA loans with competitive interest rates. You can also take advantage of the Florida Assist Program, which provides up to $10,000 in down payment and closing cost assistance in the form of a second mortgage that only needs repayment when you sell or refinance. Research the programs available and compare them to determine the best fit for your financial needs.

4. Complete a Homebuyer Education Course
Some first-time homebuyer programs require completion of a homebuyer education course, typically available online or in person. This course helps buyers understand the responsibilities of homeownership, mortgage terms, and how to budget effectively. Completing this requirement increases your eligibility for certain loans and assistance programs and equips you with the knowledge needed to navigate the homebuying process.

5. Submit Your Application and Documentation
When you’re ready to apply, work with a participating lender who can guide you through the application process. You’ll need to submit financial documents, including W-2 forms, tax returns, and recent pay stubs. Lenders will also request bank statements and conduct a credit review to verify your eligibility. It’s essential to be organized and submit documents promptly to avoid delays in your loan approval.

6. Sign the Closing Documents with a Notary
Once your application is approved, the final step is to close on your home. During the closing process, you’ll pay the necessary fees, sign legal documents, and officially take ownership of the property. The down payment assistance or grant you received will be applied toward your closing costs, making it easier to finalize the purchase and move into your new home.

Applying for a first-time homebuyer program in Florida involves several steps, from assessing eligibility to securing financing and completing required courses. With the financial support available through Florida Housing programs, achieving homeownership becomes more accessible. Careful preparation, along with guidance from approved lenders, ensures a smoother path toward buying your first home in the Sunshine State.

Housing Market in Florida

Over the past decade, Florida’s population has expanded by the second-highest number among all states, with more than 2.6 million people, according to estimates from the U.S. Census Bureau. That’s second only to Texas and nearly a half-million more people than California, which remains the largest state by population. Not only does Florida rank second for the total number of new residents, but it’s also fifth by the percentage of growth, 14% since 2010.

Top 10 states by numeric growth, 2010-2023

All of those people need some place to live, which has helped push home values higher and higher in Florida, according to Zillow data. In fact, the median home value in Florida has risen by more than 27% since 2016, the 15th-highest rate of growth in the country.

Top 10 states by year-over-year increase in median home value, 2019-2023

Florida joins three other Southern states in the top 15, a list that’s dominated by Western states, which take up all of the top five spots. Adding to rising home values are increasingly competitive housing markets in cities and metro areas across the state. For example, just a couple of years ago, the typical home in Jacksonville was on the market for more than a month before it sold (37 days, to be exact); today, the median time to a pending sale in Jacksonville is just 11 days. All other major metro areas with available data have seen this metric fall as well.

Percentage change in median days to pending sale by metro area, 2018-2023

Cities and towns within broader metro areas are largely responsible for rising home values across the state of Florida. In fact, all 25 of the cities with the highest increase in median home value over the past five years are in metro areas, with the Miami-Fort Lauderdale metro claiming eight of the 25 and Tampa-St. Petersburg claiming another nine.

Top 25 Florida cities by percentage change in median home value, 2016-2023

How to Buy a Home in Florida

Buying a home in Florida can be an exciting yet complex process, requiring careful planning and a good understanding of the real estate market. Whether you are drawn by the warm climate, vibrant communities, or investment opportunities, navigating Florida’s housing market requires a step-by-step approach.

1. Assess Your Finances and Budget
The first step in purchasing a home is understanding how much you can afford. This involves evaluating your savings, income, credit score, and debt-to-income ratio. The Florida Housing Finance Corporation offers down payment assistance programs and incentives for first-time homebuyers, providing financial relief and making the process more accessible . Be sure to also factor in property taxes, homeowners insurance, and homeowners association (HOA) fees, which can vary across regions.

2. Get Pre-Approved for a Florida Mortgage
A pre-approval letter from a lender gives you a clearer understanding of your borrowing limit and shows sellers that you are a serious buyer. Florida mortgage lenders assess your financial situation, including your credit score and income, during the pre-approval process. Government-backed loan programs, such as FHA and VA loans, are available for eligible buyers and can provide favorable terms for those with limited down payments. The minimum credit score for VA and FHA loans ranges from 500 to 580 depending upon the bank, credit union or mortgage lender.

Fannie Mae and Freddie Mac offer conventional loans for new home buyers in Florida as well. The rates on conventional loan program are very competitive. The minimum credit score for a Fannie or Freddie first time home buyer mortgage ranges from 620 to 660, depending upon the lender or bank.

3. Research Florida’s Market and Neighborhoods
Florida offers diverse regions, each with unique characteristics. Cities like Miami and Tampa provide vibrant urban experiences, while areas like Naples and Orlando appeal to retirees or families seeking quieter lifestyles. Consider factors like local amenities, schools, proximity to beaches, and commute times when choosing a neighborhood.

4. Work with a Local Real Estate Agent
Enlisting the help of a licensed real estate agent can significantly ease the home buying process. Agents provide insights into market trends, help negotiate offers, and guide you through paperwork. They also have access to Multiple Listing Services (MLS), giving you more property options that meet your criteria.

5. Make a Competitive Offer
Once you find the right home, work with your agent to submit an offer that reflects the home’s value and current market conditions. In Florida’s competitive housing market, especially in cities with high demand, it is crucial to act quickly and be prepared to negotiate. If the seller accepts your offer, the home enters the contract phase, during which you finalize terms and agreements.

6. Complete the Inspection and Appraisal
After your offer is accepted, schedule a home inspection to identify any potential issues with the property. The inspection allows you to renegotiate the offer if significant repairs are needed. Simultaneously, your lender will arrange an appraisal to confirm the home’s value matches the mortgage loan amount.

7. Close the Deal
The final step in purchasing a home involves signing the necessary documents at a closing meeting. You will pay closing costs, typically ranging from 2% to 5% of the home loan amount, which include fees for inspections, appraisals, and title insurance. Once everything is complete, you will receive the keys to your new home and officially become a Florida homeowner!

More Resources for Florida Home Buyers

Prospective first-time homebuyers in Florida can choose from a variety of financing options to facilitate their home purchase. The suitability of specific programs depends on the property’s location and the individual financial situation of each family. Fortunately, a multitude of loan and down payment assistance programs are accessible throughout the state, extending to numerous cities in Florida.

City of Miami: First-time buyers in Miami can qualify for a 0% interest rate deferred loan to help with down payment and closing costs depending on their income and the purchase price of the property.

City of Orlando: A down payment assistance program in Orlando provides no-cost loans to some first-time home buyers that will be forgiven after the 10-year loan period, assuming the borrower doesn’t sell the home before then. Eligibility depends on income, and the maximum amount available depends on the purchase price of the home, but buyers must be able to contribute at least $1,000 toward down payment and/or closing costs to qualify.

Florida Housing Finance Corp: This state agency provides several down payment assistance programs to buyers across the state that provide low-cost second mortgages that may be helpful to borrowers who don’t have the cash on hand to make a down payment. Each of the three programs have specific terms. For example, borrowers in the FL Assist program can defer a second mortgage up to $7,500 that they use as a down payment until they sell their home, while the HFA Advantage PLUS Second Mortgage program provides buyers with low-rate second mortgages that are forgiven at a rate of 20% per year over their five-year terms.

Federal Housing Administration (FHA): Mortgage loans backed by the FHA and offered through private lenders are a popular option, particularly for lower-income borrowers and/or those with medium to low credit scores. Loan limits vary across the country, and even by county. In most of Florida, the limit for an FHA-backed mortgage on a single-family home is $331,760, but it’s typically higher in counties that lie partially or entirely in metro areas. So that means in counties like Duval and St. Johns, part of the Jacksonville metro area, the limit is $371,750. Before checking all your options, be sure to consider the FHA limits in your Florida county.

U.S. Department of Agriculture (USDA): The USDA Rural Development Single Family Housing Direct Loan Program provides mortgage loans to purchase homes in rural areas and other small cities and towns, but the eligibility limits depend on household income and size. Here’s a look at the limits to be considered a low-income, four-person family in metro areas and counties in Florida:

• Cape Coral-Fort Myers: $55,100
• Crestview-Fort Walton Beach: $62,300
• Deltona-Daytona Beach-Ormond Beach: $51,900
• Gainesville: $57,050
• Homosassa Springs: $44,700
• Jacksonville: $56,900
• Lakeland-Winter Haven: $47,050
• Miami-Fort Lauderdale-West Palm Beach: $71,300
• Naples-Immokalee-Marco Island: $65,850
• North Port-Sarasota-Bradenton: $61,200
• Ocala: $44,000
• Orlando-Kissimmee-Sanford: $58,150
• Palm Bay-Melbourne-Titusville: $55,350
• Panama City-Lynn Haven-Panama City Beach: $55,500
• Pensacola-Ferry Pass-Brent: $55,250
• Port St. Lucie: $55,600
• Punta Gorda: $49,450
• Sebastian-Vero Beach: $55,700
• Sebring: $42,250
• Tallahassee: $58,150
• Tampa-St. Petersburg-Clearwater: $56,250
• The Villages: $57,050
• Bradford County: $47,850
• Calhoun County: $42,250
• Columbia County: $47,700
• DeSoto County: $42,250
• Dixie County: $42,250
• Franklin County: $44,300
• Glades County: $42,250
• Hamilton County: $42,250
• Hardee County: $42,250
• Hendry County: $42,250
• Holmes County: $42,250
• Jackson County: $43,750
• Lafayette County: $45,700
• Levy County: $42,250
• Liberty County: $45,350
• Madison County: $42,250
• Monroe County: $80,550
• Okeechobee County: $42,250
• Putnam County: $42,250
• Suwannee County: $42,250
• Taylor County: $42,250
• Union County: $45,850
• Washington County: $42,250

VA: Military veterans can secure mortgage loans through Veterans Affairs for any amount, but the agency has limits on the amount it will back. Florida is usally one of the highest ranked states for VA first time home buyer loans. These limits vary by state and county and are based on the size and price of the home in question. For most single-family homes in Florida, the limit is $548,250, with the exception of Monroe County, where the limit is slightly higher — $608,350. Monroe County is home to Key West.

Conclusion

Purchasing your first home is a very big (and admittedly ) step. That’s why it’s so important for first-time buyers in Florida to do their homework, not just on the house they want to buy but the financial aspects of making a smart purchase.

Florida Home News

Florida Insurance Crisis Grows

Florida House Buyers Struggle to Compete

References

• Zillow, Housing Data, Zillow Home Value Index by State and City, Median Days to Pending.
• U.S. Department of Agriculture, Rural Development Single Family Housing Direct Loan Program, Adjusted Income Limits.
• Florida Housing Finance Homebuyer Programs Overview.

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