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The Essential Guide for First Time Home Buyers in FL

Top 20 FAQs for First Time Home Buyers in Florida

Whether you’re looking for a waterfront property in Key West, a chic condo in Miami or a home within one of Florida’s famous golf communities, you’re in luck. You can benefit from many first time home buyer financing programs. No matter how much money you have saved for your down payment, they are worth looking into because every dollar counts.

We know being a first time home buyer in Florida is exciting, but it can also be overwhelming. Get all the facts you need to know before starting your search with these top 20 frequently asked questions (FAQs) from first time home buyers in Florida.

Q: Do I need to assemble a real estate team in order to purchase my dream home?

A: Yes. To simplify your experience as a first time home buyer, you need experienced real estate experts on your team who will deftly guide you through the process. From matching you with the best mortgage to helping you select a property, your home buying team will work together to put you first every step of the way.

Q: Who are the real estate experts I need on my Florida home buying team?  

A: You need the following six seasoned real estate experts to make buying your first home in Florida a great experience:

  1. Mortgage Broker: Mortgage brokers are focused on helping first time home buyers in Florida with purchasing their ideal house. They can take you through the mortgage application process step-by-step and help you find a loan program that works for your specific situation.
  2. Lender: Unless you happen to have enough cash for your down payment or to pay for your home in full, you’ll need a lender who will loan you the money you need to purchase it.
  3. Accountant: Your first home is probably the largest investment you’ll make. It’s a good idea to consult an accountant who has experience with helping first time home buyers in Florida with purchasing a home since he or she will make you aware of how a purchase can impact your finances. (For even more help, we recommend downloading our Financial Planning Checklist.)
  4. Real Estate Agent: A good real estate agent will work tirelessly to find a home you’ll love living in based on your budget, style and preference. They’ll guide you through the market, steer you clear of bad deals, help you find good deals and be your advocate when it comes to negotiating your home purchase.
  5. Home Inspector: A thorough and professional home inspection will be required before you can get a mortgage. It will reveal any issues with the home if any are present.
  6. Real Estate Attorney: A real estate attorney will ensure everything is done correctly, that all the documents you’re signing are in your best interest and protect you in case something goes awry.

DISCOVER THE 10 MUST-ASK QUESTIONS WHEN BUYING A HOME

Q: Are there multiple loan options available to first time home buyers in Florida?

A: Yes. There are many Florida-specific and national loan options to help you buy your first home. Although your mortgage broker will help you navigate them, it’s a good idea to educate yourself about all the different loans that are available to first time home buyers in Florida.

Q: What Florida-specific loan options are available to first time home buyers?

A: First time home buyers in in Florida can benefit from the following five Florida-specific loan options:

Florida Assist Loan ProgramMakes it easier for home buyers in Florida to make their down payments.
  • Borrow up to $7,500 for their down payment
  • 0% interest
  • Deferred payments – doesn’t have to be repaid until you move out, sell the house, refinance or pay off the original mortgage
  • Must have an initial mortgage to apply the loan to
Homeownership Assistance for Moderate Income Loan (HAMI)Assists with down payments and closing costs.
  • Offers borrowers up to $5,000 to assist with down payment and closing costs
  • Is a low fixed-rate second mortgage
  • Must be repaid over 10 years
Florida FirstProvides qualified buyers with a low fixed-rate mortgage.
  • A low 30-year fixed-rate first mortgage
  • Borrowers who qualify for this first mortgage product are automatically qualified one of Florida Housing’s down payment assistance programs
Florida AdvantageFor individuals who are purchasing homes in special geographic areas or have at least one disabled household member.
  • Buyers must be at or below 80% of Area Median Income (AMI) adjusted for household size
  • Buyers using this product qualify for Florida Assist
Community HeroesFor veterans and active duty military personnel, as well as certain healthcare workers and full-time employees of: the school system, police departments and fire departments.
  • 30-year first mortgage loan program
  • Florida Housing may offer a pool for these loans at a lower interest rate for the purpose of assisting this special target group.

Although not a direct mortgage program, the Florida Housing Mortgage Credit Certificate helps first time home buyers in Florida and veterans save on their annual federal income taxes based on how much they pay in mortgage interest. If you qualify, you can reduce your federal taxes up to $2,000/year from mortgage interest paid.

Q: What national loan options are available for first time home buyers in Florida?

A: There are several national loan options — FHA, USDA, VA, Conventional, Jumbo — available to first time home buyers in Florida.

Loan TypeDescriptionBenefits
FHA

A type of low down payment government loan insured by the Federal Housing Administration, a program office of the U.S. Department of Housing and Urban Development.

  • Low down payment
  • Flexible credit review
  • Fixed or adjustable rate
  • Limited closing costs; seller can help pay closing costs
  • No prepayment penalty
  • Available to individuals with low credit scores or no credit history
  • Special 203(k) program for home repairs

 

USDA

A type of government loan insured by the U.S. Department of Agriculture’s Rural Housing Program that enables low- and moderate-income households to purchase property in eligible rural areas.
  • No down payment required
  • Low mortgage rates
  • 100% financing
  • Reduced monthly mortgage insurance
  • Closing costs can come from a gift
  • Easy to qualify for
VAA loan provided by a private lender and guaranteed by the U.S. Department of Veterans’ Affairs in order to make homeownership more affordable for veterans.
  • No down payment
  • No cash reserves
  • No application fee
  • No monthly mortgage insurance premiums
  • Funding fee may be financed
  • Seller can help pay closing costs
  • Low interest rates
ConventionalThe most common type of loan, conventional mortgages are private-sector loans that follow the guidelines set by Fannie Mae and Freddie Mac. Borrowers can choose between 15-year, 20-year and 30-year mortgages.
  • Low down payment
  • No upfront mortgage insurance
  • Potential for lower mortgage insurance rates or no mortgage insurance at all
  • Stable interest rates
  • More appealing to sellers
  • Shorter underwriter approval process
Jumbo (Non-Conforming)Any mortgage that exceeds the conforming lending limit of Fannie Mae or Freddie Mac
  • Borrow more than a conventional or government-backed loan
  • Potential for lower mortgage insurance rates or no mortgage insurance at all

Q: How much money do I need to put down on a house in Florida?

A: If you qualify for a VA or USDA loan, you’re eligible to put no money down; if you qualify for a conventional loan, you can put as little as 3% down.

Q: Does it make sense to apply for real estate programs and grants?

A: Yes. As a result of applying for and receiving real estate grant funds, you could obtain thousands of dollars in free grant money that you may never have to pay back. These funds would help you make your down payment or supplement your mortgage.

Q: Are there any Florida-specific real estate programs and grants for first time home buyers?

A: Yes. For information about first time home buyer grant programs in Florida, contact the city or town officials in the area where you are considering purchasing your home or look at HUD’s list of Florida home buying programs.

Q: What federal real estate programs and grants exist for first time home buyers?

A: The four programs that may help you purchase your home are:

  • The U.S. Department of Housing and Urban Development’s (HUD) Good Neighbor Next Door program provides qualified first time home buyers in Florida with a 50% discount off the list price of homes available in HUD’s inventory. The program, which is only available to law enforcement officers, firefighters, emergency medical technicians and teachers, is intended to help revitalize areas. Participants must commit to living in the home they buy for 36 months.
  • Fannie Mae’s HomePath ReadyBuyer Program provides participating home buyers with up to 3% closing cost assistance toward the purchase of a HomePath property. To be eligible, home buyers must successfully complete a simple online course.
  • If your family is low-to-moderate income, you may be able to purchase a vacant home that was foreclosed on for just $1.00 via the HUD Dollar Homes program. The idea is that homeowners who fix up homes and put them to good use, will serve as a catalyst for neighborhood revitalization.
  • Down Payment Assistance (DPA) programs are intended for home buyers who can afford monthly payments, but don’t have the funds needed to meet the Federal Housing Administration’s (FHA) 3.5 percent down payment requirement. They help home buyers with loans or grants that reduce the amount they need to save for a down payment. State, county or city governments run most DPA programs.

Q: Should I get pre-qualified for a mortgage as a first time home buyer in Florida?

A: Yes. Once you know which loan works best for you, it’s a good move to get pre-qualified for a mortgage. Although you can forgo this step, doing so puts you at a disadvantage since a pre-qualified buyer who wants the same home as you will be able to bid on it first.

In addition, the process of getting pre-qualified for a mortgage gives you the opportunity to discuss loan options and budgeting with your mortgage broker. You’ll also learn what the maximum amount you can borrow is, which will help you set a home purchase price range.

Q: How do I get pre-qualified for a loan as a first time home buyer in Florida?

A: To be pre-qualified for a loan as a first time home buyer in Florida, you’ll need to provide the following to your mortgage broker:

  • Proof of income
    • Employee verification letter
    • Pay stubs from the past two months
    • IRS W-2 forms and tax returns from the past two years
  • Proof of assets
    • Savings account
    • 401(k)
    • Stock dividends
    • Investment account statements
  • Your tri-merge credit report
  • Your debt-to-income ratio

Q: Is being pre-qualified for a loan the same as being approved for a mortgage?

A: No. Don’t make the mistake of thinking that being pre-qualified for a mortgage means you’ve been approved for a mortgage. You’ll still have to secure funding by going through the standard loan application process. A mortgage broker can expedite it by serving as a liaison between you and lenders.

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Q: How should I begin the house hunting process in Florida?

A: As a first time home buyer in Florida, you’ll likely find the process simultaneously exhilarating and nerve racking. To reduce house hunting stress, here are a few things to consider prior to beginning your search:

  • What is your budget/how much home can you afford?
  • What is your credit score?
  • Would you prefer to live in the city, the suburbs or somewhere more rural?
  • What type of property are you looking for? (e.g. a single-family home, a duplex, condo, townhome, a co-op, etc.)
  • How many bedrooms and bathrooms do you need?
  • What are your must-have features in a home, and which features would simply be nice to have?
  • What is important to you? (e.g. a good school district, proximity to work, room to grow, etc.)

Q: How do I go about making an offer on a home in Florida?

A: Once you’ve found your perfect home and are ready to make an offer, you should negotiate on the price and potentially walk away if a deal can’t be reached.

Factors that will influence your offer include how long the house has been on the market and whether it requires any obvious repairs or upgrades. Once you have a signed offer, your lending institution will schedule an official home inspection. The home inspector’s report will reveal any unseen issues that may lead you to withdraw your offer or to renegotiate it.

Q: How do I apply for a mortgage in Florida?

A: If you aren’t pre-qualified for a mortgage, you have 90 days to apply for a mortgage after submitting your final offer.

The process of applying for a mortgage is not nearly as daunting as it used to be thanks to the mortgage industry being increasingly automated. For most people, getting approved is the most challenging aspect. To facilitate the process, you’ll want to connect with a highly regarded mortgage broker. He or she will expertly guide you through the mortgage application process and act as an official liaison between you and lenders. Although it’s possible to work directly with your bank to apply for a home loan, your mortgage broker will have access to a large network of lenders, which enables them to identify favorable mortgage terms for you.

The underwriter approval process is similar to the mortgage pre-qualification process. An underwriter will review your application to determine your ability to repay your debt based on factors such as credit score, credit history, employment history, income stability, debt-to-income ratio and assets.

Based on their findings, the underwriter will either approve, deny or suspend your application. If approved, your next step would be to get a home appraisal. If suspended, the underwriter likely needs more information before they can proceed. If denied, don’t fret — the underwriter will clearly explain why your application was rejected, so you can work with your mortgage broker to resolve any issues and apply again.

Q: How much is the average PMI for Florida?

A: Private Mortgage Insurance (PMI) will fluctuate based on your credit score and down payment; use a fact of 0.7% for a good ballpark. For example, on a $100,000 loan, multiply $100,000 by 0.7% for a $700 annual cost, or $58.33 a month.

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Q: Do I need to get a home appraisal in Florida?

A: Yes. Even if you’re completely in love with the home you’ve found, it may hav hidden flaws or be overpriced. This is why underwriters require a home appraisal from a lender-approved appraiser before they’ll provide final mortgage application approval. The home appraisal provides them with an objective idea of the home’s value and ensures you aren’t over-extending yourself financially.

Q: What do home appraisers do?

A: Home appraisers review:

  • Current market trends
  • The general condition of the home
  • Square footage
  • The number of bedrooms and bathrooms
  • Additional space (e.g. basement, attic, crawl space)
  • Building materials
  • Foundation type
  • Home improvements, upgrades and added amenities
  • Neighborhood characteristics
  • Lot size
  • Recent sales of similar properties

Once the appraisal is complete, the appraiser will submit their findings to the underwriter for final review and approval. If approved, your mortgage broker will work with the lender to lock in the most beneficial interest rate prior to closing.

Q: How does closing on my new home work?

A: Your heart will likely be pounding in your chest from excitement as you’re about to take possession of your dream home. Only one step remains: closing on your new home with a title company.

During closing, your mortgage broker will work with you to review and sign all loan documentation, and you’ll be responsible for paying closing costs, which will likely include the following fees:

  •  Appraisal
  • Origination
  • Legal
  • Title search
  • Insurance
  • Escrow

Q: How much are closing costs in Florida?

A: The amount of your closing costs will depend on your mortgage option, loan amount, the type of property you purchase and its location. You may be able to offset them via various methods such as monetary gifts from family and friends depending on which loan type you chose.

Congratulations, you’re officially a first time homeowner in Florida! Beautiful beaches, a warm climate, a low cost of living and more await you. If you have additional questions about becoming a first time home buyer in Florida, contact our friendly and savvy first time home buyer team directly for more information.