First Time Home Buyer in Florida: What to Know & Available Mortgage Programs

first time home buyer florida

Buying a house is an exciting time but being a first time buyer can be overwhelming. There is a lot of information to know: from the various new home loan programs to assist with financing, to being prepared financially.

Below we’ll discuss first time home buyer options in Florida and what it takes to be prepare yourself for home ownership.

First Time Home Buyer Series

Other Helpful Resources:

Determine if You’re Ready to Buy a Home in Florida

For any first time buyer in Florida, the first few steps to buying a home include determining if you’re ready to buy a home and then getting pre-approved for a mortgage. Make sure to check out those articles after you’re done reading here.

First time home buyers in Florida need to ensure you’re financially ready to step into homeownership and the commitment that entails. To get approved for a home loan, you need to be prepared for the following:

Credit Scores & History – there are mortgage credit score requirements for each program. Generally, scores above 620 are ideal, but lower credit score options are available. The higher your score, the more likely you are to get approved for financing.
Debt-to-Income Ratio – lenders are required to look at your gross monthly income compared to your current monthly debt payments, including the new mortgage you want to get approved for. Each program has different requirements which ultimately determine how much of a home you can get approved for.
Assets & Down Payment – most loan programs require some sort of minimum investment to show you’ve been able to save money. This can range anywhere from 3-5%, but there are some programs that don’t require a minimum investment such as the VA loan or USDA Loan in Florida.

It’s also important to determine if you’re ready to stay put for an extended period, which may include being committed to the area you’re living in and having a stable job that you don’t plan to leave for a while. Buying a home is a long-term investment, so being prepared financially for the mortgage payment and housing repairs are important to consider. To get an accurate estimate on what a payment will run, be sure to use our Florida Mortgage Calculator.

Florida Home Purchase Closing Costs & Out of Pocket Expenses

First time home buyers are often unaware of the costs associated with buying a home. Below is a list of some common terms and costs you need to be prepared to cover:

Earnest Deposit – once you get a home under contract, you’ll be required to submit a deposit to the title company. The earnest deposit in Florida can range from $500-$5,000 depending on the purchase price of the home. This deposit will get applied to your closing costs and down payment assuming your loan gets approved, but you can possibly lose the deposit if you back out of buying the home for no viable reason.
Appraisal fee – lenders require borrowers to pay for the appraisal upfront once you’re ready to start the loan process. This fee is collected by the lender but given to the appraiser once they go out and value your home. Generally, this fee is around $500.
Home Inspection – while a home inspection is not required to obtain a home loan in Florida, it is an inspection most first time buyers obtain for their own protection. This is when you pay a qualified inspector to look at the home for any serious defects or potential costly repairs. The inspection will run anywhere between $400 and $600 in most areas in Florida.
Closing Costs in Florida – while the 3 fees above are often due at the beginning of the process, there are a myriad of other fees involved with buying your first home which are due at closing. The lender will assess an origination fee to cover the expenses to process your loan (around $1,000). Additionally, there are standard 3^rd-party fees such as title work (around $2,000), government recording fees (around $250) and the state of Florida Transfer taxes. Florida assesses 3 separate one-time taxes due at closing, 2 of which are paid by the buyer in most scenarios: (1) Florida Mortgage tax, (2) Florida Intangible tax, and (3) the Florida deed stamp tax which is commonly covered by the seller. The amount of these taxes is based on your home purchase price and loan amount but can range from $1,000-$5,000+.
Prepaid Items – in addition to closing costs, your first-year homeowner’s insurance premium is due at closing in addition to an escrow deposit which the lender must collect for your future property tax and homeowner’s insurance premiums.

The closing costs and prepaid items on a home can run anywhere from $5,000-$12,000+, depending on your scenario. In many situations, a first time buyer in Florida can negotiate for the seller to cover some of these expenses. FHA loans allows for sellers to cover up to 6% of the purchase price in closing costs while Conventional loans allow up to 3% to be covered.

Lenders can also help with this if having the cash to cover them is a problem. Lenders can sometime offer a lender credit which can get applied to the closing costs and prepaids, thereby reducing how much you owe at closing.

When you’re ready to find out if you qualify, simply apply online and one of our licensed professionals will gladly work up a breakdown of estimated costs for you.

Common First Time Home Buyer Loans in Florida

FHA Loan in Florida

The FHA loan is the original (and premier) first-time home buyer program in the country. We have an entire article dedicated to the FHA Loan in Florida including max loan amounts.

FHA loans have the most competitive interest rates, a low down payment, flexible Debt-to-Income ratio requirements and low mortgage insurance, making it one of the best loan options borrowers in Florida have available.

Florida FHA Loan Benefits:

Low Down Payment – the FHA loan requires a 3.5% down payment
Low Interest Rates – FHA loans in Florida have lower interest rates than Conventional loans in most instances, particularly with credit scores below 700.
Flexible Credit Scores – the FHA loan is best known for having the most flexible credit score requirements. Ideally, scores need to be above 620, but in many instances, you may be able to qualify with scores down to 580.
Affordable Mortgage Insurance – FHA loans calculate their monthly mortgage insurance based solely on the loan amount, whereas Conventional loans use risk-based pricing meaning that PMI rates are based on your down payment and your credit score. So borrowers with lower down payments and lower credit scores (under 720) pay higher mortgage insurance on Conventional loans than an FHA loan.
Flexible Debt-to-Income – USDA Loans in Florida (capped at 43%) and Conventional loans (capped at 50%) have very strict debt ratio requirements. FHA loans are the most lenient, allowing a borrower to have 57% of their gross income allocated towards a mortgage payment and minimum debt payments.

The FHA program does have some property requirements, meaning that the home itself has to be an FHA approved home. There is also lower loan limits which are capped at $314,000 in most counties on 1-unit properties.

Conventional Loan Options in Florida

Conventional loans offer two separate first time home buyer options in Florida.

Conventional 3% Down

The Conventional 97 Loan, or the ‘standard’ 3% down conventional loan, is a program specifically for first time buyers. Other than the 3% down payment requirement (as opposed to the traditional 5% down requirement), there are no other significant differences between this loan and the standard conventional loan. Read our overview of Conventional Mortgages for more information.

HomeReady First Time Home Buyer Florida

Fannie Mae’s HomeReady program is the preferred Conventional First-Time Home Buyer option. While it technically isn’t just for first time buyers, it’s often used for that.

The key benefits to this program is a reduced down payment (3% as opposed to 5%), but it also offers lower interest rates and mortgage insurance compared to the traditional Conventional loan.

The HomeReady program is intended to help low-to-moderate income households, so there are income limitations. Be sure to read our first-time home buyer loan option breakdown for more details.

This program offers higher county lending limits than FHA Loans in Florida. The Conventional Loan limit in Florida is $484,350 in most counties throughout Florida.

Florida First Time Buyer Summary

While websites like ours provide a wealth of information for home-buyers, the process of buying your first home, determining which loan program is best, and getting a breakdown of costs and down payments can be challenging without help.

Our team is here to help when you’re ready. You can apply online, call or email us.

Most of our professionals have been in the business for years and have helped hundreds of first-time buyers in Florida prepare for homeownership successfully and we’ll be here to help when you’re ready.