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Who Qualifies as a First Time Homebuyer in Florida?

By: Justin DeValerio, Mortgage Sales Manager

Posted on 3/24/2023 12:41:54 PM

Couple smiles at each other as they move boxes into their new home.

Buying a home is an exciting and major decision that can bring many benefits, from building wealth to creating a sense of stability and community. However, the process can also be complex and overwhelming, especially for first-time homebuyers who are not familiar with the various rules and regulations involved. In Florida, there are specific criteria that determine who qualifies as a first-time homebuyer, and understanding them can make a big difference in your homebuying journey. In this article, we'll break down the definition of a first-time homebuyer in Florida, eligibility requirements, potential benefits, and resources to help you navigate the process with confidence. Whether you're a young professional, a retiree, or a low-income household, this guide will help you determine whether you qualify as a first-time homebuyer in Florida, and how to take advantage of the opportunities available to you.

What is Florida Housing?

Florida Housing is a state-sponsored program that aims to provide affordable housing options for low-income individuals and families in Florida. The program offers a range of housing assistance programs, including public housing, Section 8, and HOME programs, as well as community development initiatives. Florida Housing provides resources such as rental assistance, loan and grant programs, and homebuyer assistance to help residents find safe, quality, and affordable housing. The organization's goal is to make housing more accessible to those who need it most.

Definition of a first-time home buyer in Florida

To qualify for assistance with Florida Housing, an individual must meet the IRS definition of a first-time homebuyer, which means they must not have owned and occupied their primary residence for three years prior to their new home purchase. This includes individuals who have never owned a home, as well as single parents who have only owned with a former spouse while married.

Additionally, certain individuals who have only owned specific types of property may also qualify as first-time homebuyers, such as those who have only owned a principal residence that is not permanently affixed to a permanent foundation, or those who have only owned a property that does not comply with building codes.

Overall, the definition of a first-time homebuyer in Florida is broad, encompassing individuals who have never owned a home and those who meet specific criteria related to the type of property they have owned or their marital status. Meeting this definition can make individuals eligible for a range of assistance programs offered through Florida Housing, which can help make homeownership more achievable.

Eligibility requirements for first-time home buyers in Florida

To be eligible for assistance as a first-time homebuyer in Florida, you must meet the following requirements:

  • Must be a first-time homebuyer, as defined above
  • Minimum credit score of 640
  • Must use an approved lender
  • Complete a home buyer education course
  • Must meet purchase price limits for your county
  • Must be below income limits for your county

Florida Housing First Homebuying Loan Program

The First Homebuying Loan Program is offered by Florida Housing to provide first-time homebuyers with 30-year fixed rate first mortgage loans. Down payment and closing cost assistance is also available as a second mortgage, but this assistance must be used in conjunction with the first mortgage loan.

Florida Housing offers a variety of loan options, including government-insured loans such as FHA, VA, and USDA loans, as well as conventional loans through Fannie Mae and Freddie Mac. The program is available for the purchase of various property types, including single-family homes, townhomes, 2-4 unit homes, condos (in approved projects), and modular/mobile homes.

Eligible borrowers do not have to wait to close on these loans, as Florida Housing does not run out of funds and does not have a waiting list. By providing a range of financing options and down payment assistance, Florida Housing is helping to make homeownership more accessible and achievable for first-time homebuyers in Florida.

Down Payment Assistance Programs

Florida Housing offers a selection of down payment assistance programs to eligible borrowers, but remember, these are only available in conjunction with a first mortgage loan from Florida Housing.

The Florida Assist (FL Assist)

The Florida Assist program provides eligible borrowers with up to $10,000 in assistance on FHA, VA, USDA, and conventional loans. The assistance is provided as a deferred second mortgage with a 0% interest rate.

One of the benefits of the Florida Assist program is that there are no monthly payments required. The repayment of the loan is deferred until the property is sold, transferred, or refinanced, or until the borrower no longer occupies the property. At that time, the loan becomes due and payable in full.

It's important to note that while the loan is not forgivable, the repayment is deferred until a later date, which can help to make homeownership more affordable for eligible borrowers.

The Florida Homeownership Loan Program (FL HLP) Second Mortgage

The Florida Homeownership Loan Program (FL HLP) Second Mortgage program offers eligible borrowers up to $10,000 in assistance in the form of a fully-amortizing, second mortgage with a 3% interest rate.

The second mortgage has a 15-year term, with a monthly payment of $69.06. While the remaining unpaid principal balance is deferred, it becomes payable in full in the event of the sale, transfer of deed, satisfaction of the first mortgage, or refinancing of the property. Additionally, if the mortgagor(s) ceases to occupy the property as their primary residence, the unpaid balance will also become payable in full.

Because of the monthly payment, this debt may need to be considered in a borrower's debt-to-income (DTI) ratio when credit underwriting. Nonetheless, the Florida HLP Second Mortgage can be a valuable resource for eligible borrowers who need assistance with down payment and closing costs.

3%, 4% and 5% HFA Preferred and HFA Advantage PLUS Second Mortgage

Borrowers using the 3%, 4%, and 5% HFA Preferred and HFA Advantage PLUS Second Mortgage programs can receive 3%, 4%, or 5% of the total loan amount in a forgivable second mortgage, with a 0% interest rate.

The loan is forgiven at a rate of 20% per year over a 5-year term, so borrowers who remain in the home for the full 5-year period will have their second mortgage fully forgiven. Additionally, no payments are required on the second mortgage, making homeownership more affordable and accessible for eligible borrowers.

Special Programs

There are a handful of special programs available to people in eligible occupations and geographic areas.

Fireman smiles at the camera holding his helmet in one arm with a firetruck in the background.

Florida Hometown Heroes Housing Program

Launched in June 2022, the Florida Hometown Heroes Housing Program was designed to help eligible frontline workers purchase a primary residence in the communities in which they live and serve. Since its inception, the program has helped 6,753 “hometown heroes” buy their first home. Building off that success, Governor DeSantis expanded the program’s reach on July 1, 2023, with the “Live Local Act,” which saw three important updates:

  1. The bill lifted the specific occupation requirement and opened eligibility to all working Floridians who meet the other required qualifications.
  2. The maximum amount of down payment assistance was increased from $25,000 to $35,000.
  3. The 2023 Florida Legislature funded the program with an additional $100 million for the 2023-2024 fiscal year.

Through this program, eligible borrowers can receive lower-than-market rates on an FHA, VA, RD, Fannie Mae, or Freddie Mac first mortgage; reduced upfront fees; no origination points or discount points; and down payment and closing cost assistance. Specifically, the program now offers up to $35,000 in down payment and closing cost assistance on FHA, VA, USDA, and conventional loans, based on 5% of the first mortgage loan amount.

The down payment assistance is provided in the form of a 0% interest, non-amortizing, 30-year deferred second mortgage. While the loan is not forgivable, it does not require any payments until it becomes due and payable in full upon sale of the property, refinancing of the first mortgage, transfer of deed, or if the homeowner no longer occupies the property as their primary residence.

The Florida Hometown Heroes Housing Program can be a valuable resource for eligible frontline workers who may need assistance with down payment and closing costs.

Head Start to Homeownership Program (H2H)

The Head Start to Homeownership Program (H2H) is a down payment and closing cost assistance program offered to eligible individuals and families in Duval County. The program offers up to $50,000 in financial assistance to qualified borrowers who plan to reside in the home as their primary residence.

To be eligible for the program, applicants must meet the household income criteria established by the U.S. Department of Housing and Urban Development (HUD), must not currently own a home or have owned a home in the last three years, and must plan to reside in the home as their primary residence. The total gross household income cannot exceed 120% of the area median income for Duval County, as established by HUD.

The program is subject to funding limitations, unlike Florida Housing, and is available for any single-family housing unit existing or newly built (including patio homes, townhomes, and condos) located within the "consolidated City of Jacksonville." However, mobile/modular homes are not eligible.

Financial assistance is provided in the form of a 2nd or 3rd mortgage, at 0% interest for 15 years, with the principal balance reducing annually. If the property is sold or the applicant ceases to occupy the property as their principal residence before the end of the City's mortgage term, the applicant must repay the City the original balance of the loan amount or the amount by which net proceeds of the sale are available after payment of the first mortgage and closing costs.

Applicants must meet the income criteria listed and must have a minimum down payment of $500 and an inspection fee of $375. If approved, they must attend an eight-hour homeownership training class. To apply for the program, applicants should contact an approved lender to begin the process.

How to Kickstart Your Homebuying Process with Florida Housing

  1. Find an approved lender using the Homebuyer Loan Program Wizard to get pre-approved and learn more about the available programs. The lender will guide you through the credit process of buying a home and help you determine how much you can afford to spend.
  2. Take a homebuyer education course from one of the approved partners provided by your lender. The course will teach you about budgeting, credit, and other important topics related to homeownership.
  3. Find a certified realtor using the Homebuyer Loan Program Wizard or a realtor of your choosing to help you find a home that meets your budget and expectations. Once you find the right home, your realtor will help you negotiate your offer and navigate the required paperwork and inspections.
  4. Finalize your mortgage application with your approved lender, providing any required documentation as soon as possible to expedite the approval process. The lender will order the appraisal and title search, and you can shop around for homeowner's insurance.
  5. Attend the closing with your attorney or realtor, where you will sign your note and mortgage to take ownership of your new home. Congratulations, you get your keys!

By following these steps, you can streamline your homebuying process and take advantage of the resources and assistance offered by Florida Housing to make your dream of homeownership a reality.

For further assistance with First Time Homebuyer Loans and Conventional Mortgages, reach out to Community First’s Mortgage Champions at 904.371.8150.

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