Buying a home can feel intimidating and costly for first-time home buyers, whether you are looking to buy an older home or new homes for sale in Clermont, Florida. The good news, however, is that new home buyers have a variety of programs and resources available. First-time home buyers, active military personnel, and military veterans can save hundreds or even thousands of dollars by taking advantage of Florida’s homeowner programs that directly or indirectly lower costs associated with buying and paying for a new home.
Dispelling the Myth: First Time Home Buyers Exist
Before we dive into first time home buyer programs, let's discuss the truth. Truth is, there is no such thing as a first time home buyer in the eyes of the real estate industry. Sure, as your real estate agents, we recognize your first home and do everything we can to make it a wonderful experience. However, there are no "programs" that only exist for someone buying their first home. Instead, there are programs that are aimed at first time buyers.
What Makes A First Time Home Buyer
We know it's confusing, so let's talk about what the industry means when it says, "first time home buyer." Typically they are talking about a person who has no outstanding mortgages. That's pretty much it. If you want to go a step further in the definition you might include a person who has no outstanding mortgage and has little to put down toward a home. In other words, first time home buyer "programs" aren't programs at all, they are mortgages that typically are attractive to first time home buyers.
Here's a secret. If you don't have an existing mortgage, you likely qualify for these programs.
Conventional mortgages are any home loans that are not insured by the federal government. The down payments for conventional mortgages tend to be lower than other types of mortgages, with down payments of 3% being common. Conventional mortgages weren't considered "first time" friendly until recently. In years past, they required much more money down, vs their current state.
FHA loans are issued by the Federal Housing Administration. FHA Loans are available to homeowners with credit scores of 500 or more. However, the lower the credit score, the higher the down payment. Typically, FHA loans are what the biggest grouping of first time home buyer loans. The low down payment requirement (3.5% in most cases) combined with low a credit score requirement makes them ideal for those wanting to own but with some debt.
VA loans are issued by the U.S. Department of Veteran Affairs. VA loans are available only to active military personnel, military veterans, and surviving spouses. Most VA loans require small down payments, and some require no down payment at all. However, most VA loans require the homeowner to have a credit score of 640 or greater. For veterans, a va loan is often the most favorable loan type available making it the obvious "first" choice.
Other Loan "Programs"
The following loan programs look good when you read them but come with a catch. Sometimes the catch is that the property has to be in a certain area. Sometimes the catch is that you have to make a certain amount of money but not too much. If you're interested in learning more about these special programs, Contact us and we'll gladly walk you through all the ins and outs.
USDA loans are issued by the U.S. Department of Agriculture. USDA loans have no down payment, but they do have income restrictions. In addition, you have to buy a home in areas that are considered rural. For example, homes in Kissimmee do not qualify, but homes in Clermont and Groveland do. The lower the homeowner’s credit score, the more restrictions and standards they will face, which could be said for any loans.
Florida HFA Preferred Conventional Loan
A Florida HFA Preferred Conventional Loan is a 30-year fixed-rate loan that includes the cost of the down payment and closing costs in the monthly payments. Florida HFA Preferred Conventional Loans also have lower mortgage insurance rates than other types of loans and mortgages.
Florida HFA Preferred 3% Plus Conventional Loan
A Florida HFA Preferred 3% Plus Conventional Loan requires a 3% down payment. This loan includes low mortgage insurance costs as well as a closing cost grant that requires no repayment.
Military Heroes Government Loan Program
The Military Heroes Government Loan Program is open to qualified veterans and active military personnel. Unlike other first-time home buyer programs, this program is open to qualified applicants who recently owned a home. The Military Heroes Government Loan Program offers low interest rates and assistance with the down payment and closing costs.
HFA Preferred Grant
The HFA Preferred Grant offers up to 3% of the home’s value in the form of a no-strings-attached grant. The buyer can use the money for closing costs or a down payment.
Florida Assist Second Mortgage
The Florida Assist Second Mortgage allows qualified buyers to borrow up to $7,500. This is an interest-free loan whose repayment does not start until the buyer sells the home, moves out of the home, refinances the mortgage, or pays the mortgage in full.
Florida Mortgage Credit Certification (MCC) Program
The Florida Mortgage Credit Certification Program grants tax credits to qualified homeowners. Homeowners with an MCC can claim 50% of their mortgage interest – with a maximum value of $2,000 – as a federal tax credit.
There are many home buying programs, including ones not mentioned here. However, none of these programs require that this be your first home ever.