Many people dream of owning their homes. Part of that process is securing a mortgage loan and making a down payment on the property. While securing a home loan isn’t the most difficult part of the home-buying process, being able to afford a down payment can be a major hurdle for many.
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Thankfully, several down payment assistance programs can help Florida home buyers buy the home of their dreams. If you’re considering an FHA loan, programs are available to help with the down payment. Each down payment assistance program has its own requirements that are important to know to improve your chances of success when applying for them.
Overview of FHA Loan Down Payment Assistance Florida Programs
Florida is known for having a competitive housing market, making it challenging for many home buyers to get the home they want. Florida offers several down payment assistance programs to help make buying a home more accessible. Whether you’re buying your first home, your second, or an investment property, there’s a program you can benefit from.
Florida Housing Finance Corporation (Florida Housing)
The Florida Housing Finance Corporation, better known as Florida Housing, is one of the most important entities when it comes to down payment assistance in the state. Florida Housing is an organization dedicated to making buying a home more accessible and affordable.
Florida Housing partners with non-profits and local government agencies to increase affordable housing. It offers a variety of programs that suit the needs of different buyers. These include down payment and closing cost assistance programs, home-buying education and counseling programs, and more.
Even though they offer different assistance programs, those looking for an FHA loan tend to benefit the most from their assistance with a down payment.
Local and County-Specific Programs
In addition to Florida housing, there are local and county-specific programs that can help Floridians and those moving there afford the down payment on a home. These programs are designed to help the diverse population of the state.
These programs tend to have more restrictions and eligibility requirements since they’re community-specific. The best way to see opportunities in the area where you’re buying a home is to contact local agencies, see what assistance programs they offer, and learn how to apply.
Notable Florida Down Payment Assistance Programs
If you’re looking for down payment assistance in Florida, there are a few great options. Each one offers substantial financial support to home buyers but has different eligibility requirements and restrictions.
Florida Homeownership Loan Program (FL HLP)
A popular assistance program in the Sunshine State is the Florida Homeownership Loan Program (FL HLP). Home buyers can apply for this loan to help them take out a second mortgage. The second mortgage can help them cover the down payment and offers closing cost assistance. The main features of the FL HLP loan are:
- Loan Limit: Up to $10,000.
- Repayment Terms: The payment will be deferred for the first five years, but regular payments will be required over the remaining ten years.
- Interest Rate: Often around 3%.
It’s important to know that the loan terms above are standard for the FL HLP program. The buyer will have 15 years to pay back the loan. If you move, sell, transfer, or refinance the property within 15 years, you must pay the loan balance in full.
State Housing Initiatives Partnership (SHIP) Program: Flexible Funding for Local Initiatives
The State Housing Initiative Partnership Program (SHIP) is a more flexible funding option for homebuyers who need a down payment assistance loan. This program offers funding to local governments allowing them to assist homebuyers. This includes help with the down payment and closing costs. The main features of the SHIP program are:
- Flexible Assistance: The funding offered can be used for different homebuying expenses, like closing costs, not just for the down payment.
- Local Control: Each local government will receive funds, but it can then tailor its program to best suit the needs of its community.
- Income-Based: Instead of a specific loan amount for everyone, SHIP offers assistance based on the buyer’s income.
Since this mortgage loan is flexible, it’s hard to say what the loan terms will be for eligible borrowers and what the monthly mortgage payments will be. Reaching out to local agencies that are part of the SHIP program can give you a better idea of if this is the right option for you.
Florida Assist Second Mortgage Program (FL Assist)
Taking out a second mortgage is a common way for homeowners to afford various expenses. It can also be beneficial when taking out a loan to cover a down payment. The Florida Assist Second Mortgage Program (FL Assist) is designed to do exactly that. It can also help with closing costs and provide down payment assistance. Features of the Florida Assist program include:
- Loan Limit: Up to $7,500.
- Repayment Terms: Payments are deferred until the property sells, is refinanced, or isn’t the borrower’s primary residence.
- Interest Rate: 0% interest.
While the loan amount is lower than others, the 0% interest rate is what makes this down payment assistance program so appealing to homebuyers.
Eligibility Requirements for Florida Down Payment Assistance
Not everyone will qualify for assistance with FHA loans. Each program has unique qualifications that determine eligibility. Understanding the eligibility requirements for different down payment assistance programs will help you know which ones are a better option for you and avoid disappointment.
First-Time Homebuyer Status (Exceptions May Apply)
When a home buyer applies for an FHA loan and needs down payment assistance, they’ll need to complete additional requirements if it’s their first time buying a home. First-time home buyers usually need to complete a home buyer education course that covers topics like mortgage options, budgeting, and the process of buying a home.
The course is available through HUD-approved channels and agencies. You can search for the course online to find out where to take it in person or complete it at home online.
Income Limits: Vary by Program and Location
A down payment assistance program is there to help home buyers needing additional financing. So, there are income limits on FHA loan down payment assistance programs. Just like how your loan terms will vary based on your financial situation and the lender you go through, the loan terms, including the limit, will vary.
For these programs, the income limit will vary based on location and which program you’re applying through. There are some loan programs targeting low-to-moderate-income families, while others only target low-income borrowers. Learning what the income limits are for programs you’re interested in will help you know which to apply for.
Credit Score Minimums: Typically 620 or Higher
Even though many assistance programs allow a borrow to have a lower credit score, that doesn’t mean that they don’t have a minimum credit score. The minimum credit score for most of these programs is 620. A FICO credit score of 620 or higher proves that you’re not high-risk and are capable of paying the loan back over the course of the term.
Each loan program has its own minimum requirement, so it’s best to check with each program to see where you stand. As always, the higher the credit score, the better your chance of getting approval.
Property Location and Purchase Price Restrictions
The last component you’ll want to look into regarding eligibility requirements is if there are any location or purchase price limits in place. The home’s purchase price can’t be more than the specified amount.
These programs aim to help people who can’t afford a home be able to purchase one. Each program has restrictions to ensure the funds go to people who truly need the assistance.
How to Apply for Florida Down Payment Assistance
Applying for Florida down payment assistance requires many steps. Knowing how the process works will help you feel more confident as you proceed through the home-buying process.
Finding a Participating Lender
The first thing you’ll want to do is look for a mortgage lender who participates in a down payment assistance program. Since not all do, it’s important to know this information before you start doing business with the lender.
Lenders participating in these programs know more about the process and can help guide you. A great way to find a participating lender is to visit the program website you want to apply for.
Completing the Application Process
After finding the lender you want to work with, you’ll need to complete the application process. Completing the application process requires a lot of documentation, such as:
- Pay stubs
- Tax returns
- Credit reports
- Proof of first-time home buyer status
Each lender might require additional documents in addition to the above, so it’s best to ask if there’s anything else you need to provide. Gathering all your documentation together will help move the process along instead of having to pause and look for documentation you might have forgotten.
Getting Pre-Approved for a Federal Housing Administration (FHA) Loan
Pre-approval is one of the most important parts of the FHA loan application process. If you are pre-approved, it will give you a better understanding of what you can and cannot afford. Plus, pre-approval shows sellers you’re a serious buyer.
To get pre-approved, you’ll need to give your lender a detailed look into your financial status. This includes providing them with your current finances, debts, and assets. This helps them determine your loan eligibility for help with your down payment and closing costs.
Working with a Housing Counselor
By working with a housing counselor, you’ll have someone in your corner every step of the way. This is especially beneficial to first-time home buyers, but anyone looking to buy a home might find their insights and guidance valuable.
Housing counselors advise buyers on their mortgage options, budgeting, and the overall home-buying process. They can also help them navigate a down payment assistance program, ensure they have all the necessary documentation, and complete the first-time home buyer education course, if applicable.
Your Path to Affordable Homeownership in Florida
Buying a home in Florida is exciting but can also be stressful. Whether it’s your first, second, third, or fourth home, understanding down payment assistance programs for FHA loans is vital to helping people with affordable housing. These mortgage programs help buyers afford the down payment and closing costs of a home when they need a little more assistance than other buyers.
District Lending is a lender who can help you secure conventional loans with a monthly payment you can afford. We believe affordable housing is possible, especially when you work with a lender like us and know about assistance programs you can benefit from.
If you’re ready to buy a home in Florida and are looking for a lender you can trust, contact District Lending today to meet with one of our mortgage experts.
