Breaking into homeownership can be difficult. Hurdles such as affordability, credit history and market prices keep many people from achieving their goal of owning a house. Fortunately for Floridians, federal and state programs and mortgage products are aimed at first-time homebuyers to help ease the burden and make homeownership possible and lasting, especially as homeownership rates decline throughout the state.
The Florida homeownership rate is 64.4 percent as of the third quarter of 2018, according to the U.S. Census Bureau, while the average for all 50 states is 66.2 percent. Looking at homeownership in Florida before the recession, however, tells a much different story. In the first quarter of 2005, homeownership in the state was at a whopping 73.2 percent, the highest point up until present day and nearly three percent above the national average at the time.
Homeownership in Florida has fallen in the last decade, but that shouldn’t scare eager homebuyers from pursuing their American dream. In fact, there are many programs to help people achieve homeownership sooner rather than later.
In most cases, first-time homebuyer programs apply to more people than the title may imply, including those who have never owned a home, people never owned a home on their own and wish to be the sole owner of a property and others who lost their home to foreclosure three or more years ago.
First-time homebuyer programs come in many different varieties, including:
- Home loan programs.
- Financial support targeting aid outside the mortgage.
- Buyer education courses and workshops.
Your path to homeownership may involve qualifying for one or more program options, which are aimed at helping people overcome the costly hurdles of buying a home and maintaining it. Read on for details to help you find the first-time homebuyer program that’s right for you.
There are, of course, nationwide homebuyer programs available to Florida residents, including Federal Housing Administration loan options for first-time homebuyers, U.S. Department of Veterans Affairs loans and other national programs. Florida residents can also explore options from bank lenders and credit unions that offer first-time homebuyer programs.
[Read: The Best Mortgage Lenders of 2019.]
The Florida Housing Finance Corporation, often referred to as Florida Housing, is a statewide organization originally formed by the state legislature to help provide a wide range of affordable housing options for Florida residents. While individual counties or cities may offer first-time homebuyer programs specific to locals, the majority of statewide programs originate with Florida Housing. Here are the options available throughout the state of Florida:
Florida First Government Loan Program – Military Heroes Program
“Florida Housing’s programs provide assistance to eligible homebuyers by offering low-cost, 30-year, fixed-rate mortgages together with down payment and closing cost assistance,” says Taylore Maxey, press secretary for the Florida Housing Finance Corporation. Under the Government Loan Program, mortgages issued include federal programs such as FHA loans, VA loans and U.S. Department of Agriculture Rural Development loans. An additional, Florida-specific option under this program is the Military Heroes Program, which helps honorably discharged veterans and active military benefit from a lower interest rate on their first mortgage.
Florida HFA Preferred Conventional Loan Program
For borrowers who qualify for a conventional 30-year, fixed-rate loan, the HFA Preferred loan program provides the chance to benefit from lower mortgage insurance costs if they put down less than 20 percent. Maxey explains the program uses a Fannie Mae-developed loan product geared toward state housing finance agencies. Rather than helping with the down payment or mortgage costs, this program focuses on lessening the blow mortgage insurance may have on a homeowner’s monthly costs. For eligible borrowers, this program can be transformed into the HFA Preferred 3% PLUS Conventional Loan Program, an enhanced version of the original program that provides additional assistance, by including an HFA Preferred Grant of up to 4 percent of the purchase of the house to go toward the down payment or closing costs.
Florida Assist Program
This down payment assistance program functions as a second mortgage, providing borrowers with a zero percent deferred payment loan of $7,500. The borrower repays upon sale of the property, refinancing of the first (and primary) mortgage, at the end of the first mortgage’s term or if the homeowner no longer considers the property his or her primary residence.
Homebuyer Loan Program
This second mortgage program provides as much as $10,000 to eligible homebuyers. With a 3 percent fixed rate, the total loan amount is paid monthly over 15 years.
Mortgage Credit Certificate Program
Rather than targeting the mortgage itself, this program provides qualified first-time homebuyers with a federal tax credit of up to $2,000 annually for as long as they claim the property as their primary residence, pay mortgage interest and have a tax liability. Federal tax law limits deductions of state and local income, sales and property taxes up to $10,000. If a homeowner has property taxes that push the tax deduction limit beyond $10,000, the MCC Program can help offset the amount.
State Housing Initiatives Partnership program
This program doesn't fund homebuyers directly from Florida Housing but is a partnership with local governments throughout the state to encourage and create more affordable housing. “The program was designed to serve very low, low and moderate income families. Depending on your income, you could be eligible for home repair or replacement, down payment assistance, rental housing assistance and other affordable housing assistance,” Maxey wrote in an email.
While the program covers new construction, rehabilitation, financing, acquisition and down payment assistance for all types of housing, a minimum of 65 percent of the SHIP’s funds are allocated toward homeownership actions.
Other Financial Programs
While they may not directly target the mortgage itself, other financially focused programs can ease the burden of a down payment, closing costs or even the market price of a home.
HFA Preferred Grant
The HFA Preferred Grant provides down payment or closing cost assistance to qualified homebuyers by providing up to 3 or 4 percent of the home’s purchase price. Serving as a grant rather than a loan, this statewide program doesn’t have to be repaid for the assistance it provides. Eligible borrowers make up to 140 percent of the area median income, typically based on either county or metropolitan statistical area. As the Florida HFA Preferred 3% PLUS Conventional Loan Program, the grant is combined with low mortgage insurance as well.
Infill Housing Program
Some cities or counties in Florida have established infill housing programs, which are focused on helping people achieve homeownership while also maintaining long-term affordable housing options. Miami-Dade County’s Infill Housing Program, for example, offers affordable home purchases to first-time homebuyers that fall under very low-income, low-income and moderate-income rates. Very low income, in Miami-Dade county, does not exceed 50 percent of the area median income, which the county's website notes is $52,300, while low income is 80 percent and moderate income is between 80 and 140 percent of the median area income. The income limits for each group are also based on family size. The goal of the program is to help residents achieve homeownership at an affordable cost relative to their income. Additionally, when a homebuyer makes a purchase through the Infill Housing Program, she agrees to a 20-year control period where the house must be sold to another qualified buyer through the same program, ensuring affordable housing can continue to exist. After 20 years, however, the property can be sold at market rate.
[Read: 6 Tax Breaks for Homeowners.]
Education Courses and Workshops
While most first-time homebuyers need at least some financing to be able to purchase property, mortgage assistance isn’t the only way you can benefit from a program.
Many down payment assistance programs require proof of completion of a first-time homebuyer class or workshop, and fortunately these are available throughout Florida. You can typically find first-time homebuyer classes through:
- A local HUD-approved housing counseling agency.
- Municipal or county government.
- Local real estate brokerages or banks.
Homebuyer education courses typically provide a certificate upon completion and cover budgeting, money management, how to find and apply for a mortgage, shopping for a home and the steps leading up to closing.
Counseling agencies typically offer one-on-one assistance to help with preparing a budget, determining how credit will affect your mortgage rate and finding a program that fits your situation and needs. The City of Tampa Office of Housing and Community Development, for example, provides post-purchase counseling that includes individual guidance to help people stay on top of mortgage payments, home maintenance and community involvement.
While the classes are often geared toward first-time homebuyers, housing counseling agencies are available to anyone looking for guidance on their home, whether it’s about making a purchase, trouble making payments or how to protect the investment.
Are these must-haves on your list?
One of the first steps you take when deciding you want a new home is determining what you need in order to be happy there. The list of your must-haves can get long, and you reasonably can’t expect to find a house that perfectly matches all your criteria. “Someone has a list of 10 things – if they can find a house that has seven or eight of those, they’re doing pretty good,” says Jeff Plotkin, a Texas-licensed Realtor, attorney, certified public accountant and vice president of Habitat Hunters Inc. in Austin, Texas. Deciding what needs win out in your next home search can be tough, but there are a few key features and amenities many buyers seem unwilling to live without.Right in your price range
Right in your price range
Being able to afford your new home is a given, but buyers are often faced with having to choose between stretching their budget to have the master suite they want or having more reasonable monthly mortgage payments. Price often wins out in the end – you’re less likely to enjoy that master suite if you’re eating soup and foregoing vacations for the next five to 10 years to pay it off. In the 2018 National Association of Realtors Home Buyer and Seller Generational Trends report, home affordability was one of the three most important factors for respondents who recently purchased a home – behind only quality of the neighborhood and a location's convenience to work.In your preferred location
In your preferred location
Homebuyers care a lot about being able to get from point A to point B – as well as points C, D and E. Your future neighborhood can dictate what school your kids go to, how long it takes to get to work and how easy it is to stop at the grocery store when you forgot an ingredient for dinner. Plotkin says buyers put a lot of stress on where the house is, rather than what’s in the house itself. They’re looking for “proximity to schools, shopping, entertainment, public transportation,” he says.Interior over curb appeal
Interior over curb appeal
A handsome exterior keeps potential buyers from quickly driving away, but insight from new construction marketing site HomLuv.com reveals that it’s the interior that most often serves as the deal-maker. HomLuv’s website allows homebuyers to begin their search for a new home from the room they care about most, whether that’s the kitchen, living room or master bathroom. The one part of the house people don’t seem too worried about? Outside. In the roughly two months since HomLuv launched, “no one has chosen to look at exteriors first,” says Mark Law, vice president of product management for BDX, a home builder marketing company and parent company of HomLuv.The right number of bedrooms
The right number of bedrooms
While the interior of the home allows more wiggle room to compromise on your needs, there are some details that buyers must have. The right number of bedrooms would be the big one. Family expansion is often a primary reason homeowners start looking for a new house, so leaving out that extra room would defeat the entire purpose of the sale. According to the NAR report, 85 percent of homes purchased by respondents in 2017 had three bedrooms or more.Window treatments for reference
Window treatments for reference
Staging matters in a home. As much as we think we can picture how a vacant house will look with our own furnishings and decor, at the end of the day we need some suggestions. Law says builders will include big picture windows in bedrooms or over the tub in a master bathroom to let in natural light, but if the photos show the space without curtains or blinds, house hunters will inevitably see a design flaw. “They’ll say, ‘I’m not an exhibitionist,’” he explains. To avoid turning homebuyers off, window treatments should be included in listing photos and for home tours.Move-in ready
The condition of the home you shop for often goes hand in hand with your budget and the neighborhood you hope to live in. If your budget is at the lower end of the price range in the hottest community in town, you’ll likely find yourself buying a house that needs a little love. If your budget doesn’t restrict it, chances are you’ll have your pick of properties that have been turned by real estate investors. “The [buyer] demand is for 100 percent move-in ready condition,” says Bobby Montagne, CEO of Walnut Street Finance, a private money lender focused on home flipping in markets in Virginia, North Carolina and the District of Columbia metro area.Possible to picture your vision
Possible to picture your vision
Even if you’re one of the detractors who prefers a fixer-upper, it’s still necessary to be able to envision how the space will look once you’ve added your personal touches. Based on reactions from HomLuv users, details as small as the cabinet color in a photo can change the way a person thinks about a house. Law says he’s found preferences differ from region to region – darker cabinets may see more love in the South, while in California the preference is for white kitchen cabinets. “You could offer a free puppy and free pots and pans with the house, but if the cabinets are dark they still don’t want it,” he says.Warranty available
For newly built homes and those that have been recently flipped with significant work, you want to know that the professionals involved stand by their work. New construction homes often come with a warranty from the builder or the option to get a third-party warranty, and you should ask the investors involved with a flip for the same level of protection. “A good builder [or] a good flipper does not have a problem with that,” Montagne says. If an issue arises within the life of the warranty related to the workmanship, you can rest easy knowing you’re covered financially for the repairs.Potential for value growth
Potential for value growth
Your home isn’t just where you’ll live – it’s also an investment. There are a few easy decisions you can make that reduce the chances of losing out on potential growth in value over time, whether that means buying in a neighborhood where home values are steadily growing, finding a home in a desirable school district or avoiding living next to a strip mall. “When you’re buying a house, you’re not only buying it for yourself, you’re buying it for resale,” Plotkin says. “So most people are not going to want to back up to commercial [property] or a busy road.”Read More
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at firstname.lastname@example.org.
Devon Thorsby | June 5, 2019
Homeowners should not fret, as long as they're prepared for the possibility of a downturn.