Everything You Need to Know About Florida Down Payment Assistance
If you’re new to the idea of down payment assistance, you may assume that down payment assistance is the same in every state. While there are similarities, there are also many differences when you compare states side by side.
Florida is unique for many reasons. One of the main things that sets it apart is that it’s impacted by hurricanes on a pretty routine basis— and obviously areas hit differ year to year. So while many counties may have funds set aside for down payment assistance, a few have had to reallocate DPA funds to help with needed community repairs. Don’t worry, despite this facet of Florida, there is still a lot of money in this state for prospective homebuyers.
In this article, we’ve put together a lot of tips to help you through your DPA journey. Having scoured through every searchable program, we’re in a unique position to give you a good overall view of down payment assistance programs in Florida.
To learn more about down payment assistance in Florida and how to apply, keep reading.
Tip 1: Many Florida down payment assistance loans don’t have to be repaid.
Many counties offer forgivable loans to DPA recipients. All that’s required for you to never have to make any payments is that you live in the house for a certain number of years and keep the title in your name. If the house is foreclosed, you sell it, rent it, move out, or transfer the title to someone else, you will be required to repay the full amount.
But many don’t offer all or nothing deals. Some offer DPA loans that are forgiven a certain percentage each year after you’ve lived in the house for a few years. For example, many are 0% interest, 0 payments for fifteen years. The money starts being forgiven at a rate of 25% per year after you’ve lived in the house for ten years. So by year fifteen all of the loan is forgiven.
Ten to fifteen year loan terms is the average or DPA loans, but 5-7 year forgivable loans do exist.
Tip 2: Buyers often still have to put down some money with most Florida down payment assistance programs.
Read through all DPA programs and you’ll see a wide array of minimum buyer down. $500-$2,000, depending on income, or 0.05% of purchase price to 3% of purchase price, depending on your income. Some don’t require anything from the buyer, but most expect you to put something towards the house. Many people use their tax returns to cover their minimum buyer down.
Tip 3: Most programs don’t require buyers to live in the county they want to buy in prior to applying, but some do.
Find the program with the most money that is an acceptable driving distance to work. You don’t have to only apply to programs that serve where you are currently living. One or two require you to live in the county or city for a certain amount of time beforehand, but most don’t have this requirement.
Tip 4: Some Florida down payment assistance programs offer additional funds for repairs after you close.
Awesome, right? In addition to getting a forgivable loan, you could also receive free repair money as high $10,000. Obviously there are terms and conditions to the money, but with that much you could consider buying a less expensive, dated house and renovating it the way you like it.
Tip 5: The amount of assistance you receive depends on how your income compares to the county’s average median income.
Usually DPA programs in Florida want at or below 80%, but often go as high 120% of the average median income. We’ve seen some as high as 180% in our research across the country. Generally, the less money you make, the more money you receive from a DPA program.
If you make 100% of the median, that means you make the same amount of money as is typical for people in your area. So if the average is $50,000, and you make $50,000, you make 100% of the AMI. To be at 80% would mean you make $40,000.
Each county has different average median incomes, and the amount of people under the same roof changes the requirements. Two parents with three kids would have easier requirements than two people without kids.
Tip 6: Not all programs are listed on the internet.
If you don’t see any programs listed for your area, or you just found out that the program you wanted to apply to isn’t accepting applications until next year, call your local housing authority. They may know of programs that aren’t listed online.
Tip 7: Some programs require you to be pre-approved with a lender prior to applying.
There’s no point in approving you for DPA funds if you can’t get approved for a first mortgage. This isn’t a big deal. Read through the application process to see if this is necessary before you apply.
Tip 8: Some programs only allow buyers to work with certain approved lenders.
DPAs should be a part of your strategy from the beginning. If you already have a lender, but it’s not on the list, don’t be afraid to do one of two things. Option 1, call the program manager for your DPA and ask if they’ll accept your lender. If they will, you’ll then have to call your lender and ask if they’ll accept DPA funds for your down payment. Option 2, drop your lender in favor of one on the approved lender list.
The reason DPAs have approved lenders is because lenders themselves don’t like to see down payment funds coming from anywhere but the client. Down payments are used as a way to ensure you’re all in and won’t walk away from monthly payments. They’re also there to verify that you’re financially responsible.
If you need to switch lenders, don’t worry about it. You’re under no obligation to use them, regardless of how many email exchanges you’ve had. You just can’t currently be under contract. Obviously make sure that the APRs are similar between the lenders. If the new lender has a higher interest, how much more would that amount to for the life of the loan? Does it make sense to switch in the long run?
DPA programs are unlikely to partner with lenders who charge exorbitant interest rates. That defeats the entire purpose of the program to begin with. Here again, programs have approved lenders for the simple reason that that lender has agreed to accept DPA funds as the down payment. So don’t be afraid to pick up your phone and call your original lender and ask. There’s a good chance they’ll say yes if it means keeping your business.
Lenders make a lot of money off of homebuyers, so you hold all the cards. Be strong and relentless when talking to them. Don’t accept a higher interest rate just because you want to use DPA funds.
Tip 9: A few down payment assistance programs require you to be under contract before applying.
Unfortunate, but true. This means you have to basically have the money for a minimum down payment prior to applying for a DPA just in case you don’t get approved. Which also means you’re basically using the DPA money to get you free equity in your new house. Not a bad strategy when you think about it, but these kinds of DPAs seem to have forgotten who they’re serving— people who can’t afford the minimum down payment for a house.
Don’t worry, you won’t see too many of these, but be sure to keep an eye out for them.
Tip 10: Most programs require you to take a homebuyer education workshop.
A simple, cheap requirement to complete. Check the fine print if you have to have the class prior to your application or if it’s OK to wait until you’ve been approved. Sometimes they cost a few bucks, and sometimes they’re free. Some you can complete online, and some you have to either go to an evening or weekend class. All are worth doing if they get you free money.
Tip 11: Most programs only work with first time homebuyers or those who have not owned a home in the past three years.
You can’t sell your house and immediately apply for down payment assistance funds. It has to have either been three years since you owned a house, or you must be a first time homebuyer. If you look closely, you will notice that there’s one or two programs on the list that don’t have this requirement, but they are far from the norm.
Tip 12: Amount of funds vary greatly county to county.
This may have to do with the average house price in the county (but we didn’t research this), or it may just reflect how much funds are available. Simply put, the maximum assistance available per applicant can vary a lot county by county.
If you’re open to living in a few different areas, and house prices are basically the same, why not apply where there’s more money? Especially if each program offers a 0% interest, 0 payment forgivable loan.
Tip 13: A Few programs have specific application dates.
Read and understand the application process thoroughly. Some programs have application windows. If you miss it by an hour, you’re out of luck.
Know that it’s not the standard, but don’t assume yours isn’t one of them.
Tip 14: Most down payment assistance programs in Florida are county specific, while a few are city specific
When searching for DPAs, we had much more success just sticking with county searches. Some of the bigger cities in Florida have their own programs, but for the most part they don’t. It might be worth your effort conducting a separate search for your city, but don’t be surprised if nothing comes up.
Tip 15: Almost all down payment assistance funds in Florida come through SHIP (State Housing Initiatives Partnership)
This is not super important, but it’s good to know. If you don’t see a DPA program listed for your area listed on a Google search, or for some reason one of our hyperlinks doesn’t take you anywhere, you’ll likely be able to find it by including SHIP in your search. Most government run sites in Florida have something that comes up if you type ‘SHIP’ into the search field.
Just know that SHIP funds don’t just cover down payment assistance. They can also be used for needed house repairs or renovations. Therefore, it’s not a guarantee that if you find a link connected with SHIP funds that you’ve also found a down payment assistance program. However, there’s a good possibility that you have.
Tip 16: A few programs have credit score requirements.
Why this is so is anyone’s guess. Having a credit score requirement for a down payment assistance loan is a moot point if you can’t get approved for a first mortgage. That said, a few programs on the master list have credit score requirements of 640.
Don’t worry, DPAs are meant to help borrowers who are moderate to very low income earners. Typically, low income earners don’t have excellent credit, and are in the fair credit score range. For the most part, if you can qualify with a bank to buy a house, you’re going to qualify with a down payment assistance program.
Tip 17: Call before you apply.
Sometimes programs appear open online, but in reality they ran out of money a few months ago and haven’t gotten around to updating their webpage. So you don’t waste your time, call to verify that they’re taking new applications.
Tip 18: Funds are distributed on a first come first serve basis.
Your need for the funds obviously plays a role in determining if you qualify, but after that it’s on a first come first serve basis.
That said, you can use this knowledge to your advantage. If a program is out of funds, call and determine when it will receive more. If there is a waiting list, this obviously won’t work to your advantage, but if there’s not, you can submit your application right when the program opens back up.
Tip 19: Understand the application process thoroughly.
This has been covered throughout, but it’s worth repeating one more time. Each program has different application and approval steps. If you are confused about any aspect, call the program manager. We’ve provided contact information for every down payment assistance program that we could for this very reason. Many programs get a lot of applications, and it only takes a simple mistake to get your application thrown in the trash. Cover all of your bases and make sure you understand what’s expected of you before you submit your paperwork.
Is it worth doing? Yes! Does it take a little bit of work? Yeah, but just a bit.
With down payment assistance you essentially get free equity right from the get go. Equity can be used for a lot of things to further propel you to financial independence. Just be sure that the house you buy has affordable monthly payments and is a solid investment.