Florida Down Payment Assistance Programs For First Time Homebuyers

The PropertyClub Team
Oct 16th 2020
Here's what you need to know about the down payment assistance programs and grants available to you if you're a first-time homebuyer in Florida, and are having trouble saving up for a house.

Buying a home is a significant milestone in a person’s life. But many fail to take the plunge because of credit problems or difficulty saving enough for a down payment. Homeownership rates have been on the incline over the past five years. However, only about 65% of US residents own their homes. Luckily, if you're thinking of buying a house in Florida, there is hope. The Florida Housing Finance Corporation offers various programs for locals, including help for first-time home buyers. 

Down Payment Assistance for First Time Home Buyers in Florida

Anyone who has purchased a home can attest that it’s not always easy to get approved. After the 2008 Housing Crisis, lenders were forced to tighten their restrictions on who could be approved for a mortgage, and the qualifications became much stricter. As a result, fewer first-time homeowners are eligible to get mortgage loans through conventional a lender.  

Homeownership is vital to a healthy economy because it provides financial security to residents and cashflow to banks and other lending institutions. Low homeownership rates can cause instability in both the lives of residents as well as the broader financial market. That’s why the Florida Housing Finance Corporation offers assistance to eligible families who need help buying a home. 

Lending to unqualified borrowers is an unethical practice and should be discouraged. However, that doesn’t mean only the most financially successful residents deserve to own a home. Homeownership should be accessible to any American who is willing to put in the work. Here are a few of the homeownership assistance programs available to first-time homebuyers.

What is the SHIP Program? 

The State Housing Initiatives Partnership (SHIP) program is a project administered by the Florida Housing Finance Corporation that provides funds to local governments to be used to promote affordable housing and homeownership. Funds are allocated to all 67 counties in the state of Florida and distributed using a population-based formula. This allows local governments to finance construction projects and homeownership programs for low-income residents. Each county receives a minimum of $350,000. The funds are to be spent on homeownership activities, construction projects, and helping low-income and very low-income households get access to affordable housing.

SHIP funds may be used to finance:

  • Emergency repairs
  • New construction
  • Rehabilitation
  • Down payment and closing cost assistance
  • Impact fees
  • Affordable housing acquisitions
  • Federal grant matching
  • Mortgage buydowns
  • Homeownership counseling

You can contact your local Community Development Office if you live in Florida, and you’re in search of affordable housing or assistance buying a home. They will let you know how your local SHIP dollars are distributed and what programs are available.

What is the Florida First Time Home Buyer Program?

The Florida Housing First Time Home Buyers Program is a housing program offered to low-to-median-income Florida residents who are first time home buyers. 

The term first time home buyers can be somewhat deceiving because anyone who hasn’t owned a home in the past three years qualifies for the program. So, you may have owned a home in the past but still qualify for assistance as a first-time homebuyer.

The Florida Assist Program is a part of this initiative and helps low to median income first-time home buyers access affordable mortgages and down payment assistance. Qualified applicants can get approved for a low-interest 30-year fixed-rate loan with down payment assistance options. The program offers up to $7500 in down payment assistance and access to a 0% deferred second mortgage for up to $10,000. 

First-time homeowners are also encouraged to apply for a Housing Financing Agency (HFA) preferred down payment grant. An FHA grant is offered as a 3%-5% forgivable second mortgage. This means the borrower does not have to repay this part of the mortgage, as it is a grant and not a loan.

In addition to the HFA grant, borrowers may also be eligible for a Florida Homeownership Loan Program Second Mortgage. This mortgage is a loan and not a grant, but it is another option available to homeowners who may not qualify for an FHA grant. These second mortgages are available for up to $10,000. They are typically offered at 3% over 15 years.

Although these programs are available to a wide variety of Florida residents, there are still basic requirements. Most loans require at least a 560-credit score, and the debt to income ratio is also taken into account. But they offer great resources to those who would traditionally be denied conventional loan access to assistance and affordable programs.

What are the Benefits of the Program for Florida Residents? 

  • Get into a Home with Little to No Money Down: One of the major barriers to buying a home is the down payment. Many people can’t afford the traditional 20% of the sale price encouraged by banks or the mortgage insurance that is often required if you can’t make the full down payment. These programs offer families a feasible way to purchase a home without having to save for years and years. 
  • The stability of a long-term loan: Life can get chaotic when you’re hopping from rental to rental, always unsure if your landlord is going to raise the rent or refuse to renew the lease. Having access to a 30-year fixed-rate loan gives you the peace of mind to know that you have a place to live for the long term and you are aware of exactly how much you’ll be required to pay. 
  • Laxer Requirements than a Conventional Loan: A conventional mortgage is increasingly more difficult for working families to afford. Although there are still minimum income and credit requirements, by and large, government-sponsored loans are easier for ordinary people to get than your typical mortgage. Many counties require a home buyer education course to educate residents on proper financial planning. But an average conventional loan requires a credit score of 680, whereas Florida Assist loans are available to residents with a score as low as 540.