There is something rewarding about owning your home, but this is also a big investment, especially for first time home buyers. There are a lot of considerations and preparations if you are thinking about purchasing your first home.
This is a quick summary of different lending options that you may wish to talk to lenders about as you decide if you are financially ready. I also recommend talking to at least 2-3 different lenders because they all offer different programs, have different risk appetites and may have different interest rates and other variables.
NATIONAL LOAN PROGRAMS
Conventional Mortgage: First-time buyers can make down payments of as little as 3 percent. The loans also may help buyers avoid paying mortgage insurance — if they put 20 percent or more down — or eventually cancel it. This is a loan not guaranteed or insured by the federal government.
FHA Loans: Those with credit scores as low as 580 can qualify for a Federal Housing Authority mortgage with a down payment as low as 3.5 percent. If your credit score is 500, the FHA will still insure your mortgage loan with a down payment of 10 percent. The buyer is required to pay mortgage insurance.
VA Loans: The U.S. Department of Veterans Affairs helps veterans and their spouses with competitive interest rates that often require no down payment or mortgage insurance.
USDA Loans: These also require no down payment in certain rural and suburban areas (including parts of Sarasota, Charlotte and Lee County, and all of Collier County). There are income requirements that vary by region.
STATE AND COUNTY PROGRAMS
Florida First Bond Program: Florida Housing, the state agency that helps finance homeowners, offers fixed-rate 30-year mortgage loan programs — though brokers and real estate agents say it can sometimes be a challenge finding a lender that will participate. Most of the loans are designed to be used by first-time buyers in conjunction with down payment or closing cost assistance if needed. There are income, credit and other requirements, including that you take an eight-hour first time homebuyer education course. And some funds may only be available on a first-come, first-serve, county-by-county basis until they are replenished the next year. Florida First All buyers who qualify for a bond loan qualify for this 30-year, fixed rate FHA, VA, or USDA loan. The loans may be used along with Florida Housing’s down payment and closing cost assistance program called Florida Assist — a zero percent interest second mortgage.
Florida Military Heroes Government Loan: This loan program helps veterans and active duty military personnel with 30-year, fixed rate FHA, VA, and USDA loans. Florida Housing generally offers a pool for these loans at a lower interest rate for this special group. It may be used with Florida Housing’s down payment and closing cost assistance program (Florida Assist).
Florida HFA Preferred Conventional Loan Program: for BOND All first-time homebuyers who qualify for this 30-year, fixed rate first mortgage program may also use Florida Housing’s down payment and closing cost assistance (Florida Assist). This first mortgage program offers a lower rate than the FL HFA Preferred Conventional Loan Program for TBA.
FL HFA Preferred Conventional Loan Program: for TBA All first-time homebuyers who qualify for this 30-year, fixed rate first mortgage program also qualify for Florida Housing’s down payment and closing cost assistance second mortgage (Florida Assist).
HFA Preferred Grant: 3 percent PLUS Conventional Loan All first-time homebuyers who qualify for this 30-year, fixed rate first mortgage program also automatically qualifies for Florida Housing’s 3 percent grant down payment and closing cost assistance, which does not need to be repaid.
HFA Preferred Grant: 4 percent PLUS Conventional Loan All first-time homebuyers who qualify for this 30-year, fixed rate first mortgage program also automatically qualifies for Florida Housing’s 4 percent non-repayable grant which provides down payment and closing cost assistance.
Owning a home may be more realistic that you realize. Take the time to consult with a home loan specialist. If you need some lender recommendations, don't hesitate to reach out to me at renee@YourNaplesExpert.com