The Ultimate Guide to Unique Loan Programs
The Florida Housing Homebuyer Loan Programs offer subsidized mortgage loans to eligible borrowers to help purchase residential homes. This program, also known as the FL Bond Loan program, is coordinated by FL Housing in partnership with the US Bank and vetted lenders.
The loans are designed for first-time homebuyers who need financial assistance to purchase their primary residential homes. This FL Bond Loan program is classified further into first mortgage loans and second mortgage loan products in the form of down payment & closing cost assistance. Below is a full breakdown of the FL Bond program, from how it works, the program requirements, loan closing information, program fees, and everything in between.
Who Is Involved and How Does the Program Run?
As stated earlier, the FL Bond program is run by Florida Housing with the help of the fully vetted lenders, financed by the US Bank. The participating lenders are the ones to originate, underwrite, and close the loan products before funding. They then deliver the closed programs to the US Bank for purchase. All the critical documents needed for the FL Program loans are obtained from the eHousingPlus eHPortal or simply eHousing.
Besides providing lenders with the eHPortal, eHousing also reviews all the loan files to ensure compliance with the eligibility requirements. They provide all the digital documentation required and notify the lenders of any changes or exceptions to the compliance on delivered loans.
On the other hand, the US Bank Home Mortgage, popularly known as the US Bank, is the master servicer and financer of all the first and second mortgage loan products. The US Bank provides training and assistance to lenders on purchase and delivery requirements of the loan products. It also notifies them of any collateral file review and reports exceptions on the delivered loans.
To fully understand the FL Bond Loan origination process, let's take a look at the steps highlighted below.
FL Bond Program Loan Origination Process
Before the lenders can qualify borrowers for this loan program, they must first attend online training and be certified to conduct business on behalf of the US Bank. Similarly, the lenders must ensure that borrowers have completed a homebuyer education course that the HUD approves. Next is for the lenders to gather all the relevant documents from borrowers needed to confirm their eligibility to participate in the FL Bond Program.
Here are the other steps in their proper order:
Lenders provide program disclosure forms to borrowers after the sales contract is obtained and the loan application has been recorded in the origination system.
The lender’s underwriters certify the loans for compliance with the FL Bond program requirements. Lenders should ensure that all the loans are certified before locking the first and second mortgage programs in the eHousing portal.
The FL Bond Program closing documents, including the second mortgage documents, are obtained from the eHousing portal to be forwarded to the closing company alongside the first mortgage loan documents.
The loan closes, and the lenders submit the FL Bond Program compliance file to eHousing for review and the closed first and second mortgage loans file to the US Bank for approval and purchase review.
EHousing communicates to lenders on any exceptions for non-compliant loan files. The US Bank also issues any exceptions to lenders for loan files deficient in loan documentation or not meeting the FHA or US Bank requirements.
- The lenders then submit all the necessary documentation needed to clear the loan for purchase to the US Bank or eHousing. US Bank purchases all the eligible loans, and the lenders are reimbursed.
Types of Loan Products Offered
The FL Bond loan program is classified into the first mortgage programs and the second mortgage programs. Below is a detailed overview of each of the two mortgage loan vehicles.
Overview of the First Loan Mortgage Programs
FL Housing offers three first mortgage loan products to eligible first-time homebuyers. These loan products are:
The FL First Mortgage Loans – This is a government-sponsored loan product offering a 30-year, fixed-rate mortgage. The borrowers eligible for this loan automatically qualify for the down payment assistance program through the FL Assist or the FL HLP Second Mortgage Program.
The FL HFA Advantage Loans – This is a conventional loan product that offers qualifying borrowers a 30-year, fixed-rate mortgage. The loan offers borrowers an income at/below 80% of the Average Medium Income (AMI) reduced mortgage insurance (MI) premium as determined by Freddie Mac. Those with an income above 80% of the Average Medium Income are not eligible for participation in this program. Similarly, borrowers eligible for this program will automatically qualify for the down payment assistance program through the FL Assist or the FL HLP Second Mortgage Program.
- The FL HFA Preferred Loans – This is a conventional loan Product that offers qualifying borrowers a 30-year, fixed-rate mortgage. This loan product also offers eligible borrowers with income at/below 80% of the Average Medium Income a reduced Mortgage Insurance premium as determined by Fannie Mae. Borrowers with income above 80% of the Average Medium Income pay standard mortgage insurance. Those who are eligible for this first mortgage program automatically qualify for the down payment assistance program through the FL Assist or the FL HLP second mortgage program.
Overview of the Second Loan Mortgage Programs
Florida Housing offers eligible first-time homebuyers a second mortgage loan program that's used specifically to cover down payment costs, mortgage insurance premiums, and closing costs. The funds can also settle prepaids or be used as a first mortgage principal reduction.
FL Second mortgage programs are classified into the FL Assist and the FL Homeownership Loan Program (FL HLP). Here's a quick look at the two:
FL Assist Second Loan Program – This is a 0% interest, non-amortizing, deferred second mortgage loan that offers up to $7,500 in conventional loans and up to $10,000 for FHA, USD-RD, and VA loans. The FL Assist isn't a stand-alone loan product and can be deferred. However, the loan is not forgivable and must be paid in full if the property purchased is sold or transferred. Similarly, if you refinance the property, satisfy the first mortgage, or cease to occupy it, the FL Assist becomes payable in full.
- FL HLP Second Loan Program – This is a 3%, fully-amortizing, second mortgage loan that offers up to $10,000 for a period of 15 years. The loan carries a monthly payment, and any unpaid balance becomes payable in full once the property is sold, transferred, or refinanced. If you satisfy the first mortgage or cease to occupy the property, the FL HFP also becomes payable in full.
Both the FL Assist and the FL HFP cannot be combined with any of Florida Housing's other down payment programs. However, any borrower who qualifies for the FL first mortgage programs is automatically enrolled into either of these two-second mortgage programs.
FL Bond Program Requirements
Now that you know the different types of FL Bond programs, let's explore the various requirements needed to join the program. These programs are classified into four, each with its specifications. Below is a detailed overview.
1. First Time Homebuyer Requirement
To qualify for the FL Bond program, you are required to be a first-time homebuyer. In other words, you shouldn't have shown any ownership interest in a primary residence at any time during the three years before the date at which the FL mortgage loan is signed/executed.
However, two exemptions can allow you to bypass this limitation. The first requirement is that you are a veteran who has served in the active naval, air force, or military and was released or discharged under conditions deemed as honorable. Those qualifying under this first exception must also certify that they meet the other Mortgagor's Affidavit requirements.
The second exception is that you are looking to buy the property in a federally designated targeted area. The federal government recognizes these areas as needing additional help to develop either due to recent natural disasters or slow economic progress. In Florida, there are more than 30 counties with areas that have been identified as federally targeted.
Even if you are buying your second home, you can qualify for the FL Bond Program, provided you are buying a property in specific neighborhoods within these counties. Using this exception, the state government encourages more people to buy residential homes in the targeted areas.
2. Income Limit Requirements
The income limit requirements ensure that only those borrowers who need financial help are targeted. The requirement sets an income limit beyond which the borrower isn't eligible for the FL Bond Programs. In other words, you should not exceed a given income limit to qualify for the FL Housing mortgage loans.
The income limits vary depending on where the property you want to buy is located. If the property is located in a federally targeted area, the income limit will be higher. For instance, those buying a property in a targeted area within Alachua County will need to have a household income that doesn't exceed $87 840 (no household unit restrictions).
However, if you buy a property in the same county but in a non-targeted area, your household income shouldn't exceed $84 180 (adjusted for 3+ persons) and $73,200 (adjusted for 1-2 people).
Determining Household Income
When determining the income limit, several factors are considered. First, the lenders are interested in determining the borrower's household income figures.
Household income is the average income of all the household occupants of age 18 and above. When determining this figure, the current gross monthly income is first calculated before multiplying by 12 months. Here, all the available and valid pay documents such as recent pay stubs and financial statements are used.
Similarly, all the income sources are considered, from formal employment, self-employment, business, income from investments, royalties, pensions, rental income, VA compensation, overtime, child support & alimonies, etc. The documentation required to confirm these income sources will vary depending on the borrower's occupation, income sources, work schedule, and how often one receives the paycheck.
If the monthly income is inconsistent from one month to the other, average pay is calculated and adjusted accordingly to reflect your most accurate current gross annual income. Other supporting documentation, such as the income recorded on previous tax returns, can also be used.
Once the current Gross Annual Income is obtained, it's compared to the income limit adjusted to the specific household size. If the Gross Annual Income falls within the limit, the borrower is eligible for the FL Bond Loan Program requirements.
3. Purchase Price Limit Requirements
This requirement limits the contracted purchase prices or the prices of the available properties for sale. In other words, you cannot pay more (using the FL Bond loan) than the predetermined maximum amount for different property types in various counties within Florida.
These purchase price limits also vary per county and specific regions within the county. Ideally, the purchase price limits are higher in targeted areas than in non-targeted areas. For instance, you can buy a property located in a non-targeted area in Alachua County using the FL Bond Program if the contracted price doesn't exceed $311,980.
However, you can purchase a more expensive and perhaps high-value home not exceeding $381 308 in the same county using the FL Bond Program if you were to choose a property located in a targeted area.
Both the state and federal governments encourage homeownership in federally targeted areas, and they incentivize potential homebuyers with higher income limits and higher purchase price limits.
4. Other Requirements
Besides the three requirements we've highlighted above, some additional requirements are stipulated by the US Bank and the FHA. The other requirements include a minimum FICO score of 640 for new loan reservations and FICO scores of 660 or lower for FHA loans. Borrowers must also satisfy all the FHA requirements and any other conditions imposed by the US Bank.
First-time homebuyers are required to complete a homebuyer education program that's approved by the US Housing and Urban Development or the National Industry Standards for Homeownership Education and Counseling. The program can be conducted online or in-person, but it must be offered pre-purchase. It is unacceptable to skip this education program or offer it after closing the mortgage loan program.
FL housing and the US Bank expect the lender to organize and oversee the homebuyer education program. In most cases, the lenders will partner with mortgage insurance providers, offering the teaching courses themselves or outsourcing to another third party. Either way, the program should meet all the standards set forth by the two overseeing bodies.
The homebuyer education program is designed to prepare homebuyers for the process of purchasing the home and all the challenges they may face as new homeowners. It offers in-depth information on how to improve credit on your home, work with lenders and realtors, and the best mortgage products for the homebuyer's unique financial situations. Through this program, homebuyers learn more about the FL Bond Program to help them navigate the application process with ease.
That said, the certificate you receive after completing the Homebuyer Education Program is valid for two years after the date of program completion.
When applying for an FL Bond Loan program, it's best to understand the different guidelines and restrictions so you can prepare in advance. Under the FL Housing first mortgage programs, some of the property types eligible for financing include:
Attached/detached 1-unit dwelling including townhomes.
2 to 4 unit properties – borrowers, must occupy at least one of the units as their primary residence, and the property must be at least five years old.
Condos – the US Bank must approve all condos to be financed. FHA guidelines must also be followed.
Manufactured housing – this is only permitted with FHA loans. Manufactured housing isn't allowed with VA and the USA-RD loans.
- Modular housing is permitted – these are homes built at one location and assembled at a different location. Modular homes aren't mobile.
It's worth noting that the FL Bond Loan Program expects that no more than 15% of the property's square footage may be used for business purposes.
Loan Closing Information
When closing the FL Bond Programs, there is some important information you need to pay keen attention to. Some of this information is critical at closing, while others will help you navigate any future challenges associated with your property. Here's a quick overview of the most important FL Bond Loans closing information:
Doc Stamp and Intangible Tax – documentary stamp tax is a tax on any document, instrument, or loan paper that shows the acceptance, sale, or transfer of a right, obligation, or property. On the other hand, an intangible tax is imposed on the privilege of transferring, owning, or dealing with and benefiting from intangibles. Both the FL's first and second notes and mortgages are exempt from these two taxes.
Power of Attorney – this legal authorization is permitted by the FL Bond programs but must satisfy all the (FHA, VA, USDA) or GSE (Fannie Mae and Freddie Mac) requirements. Similarly, power of attorney must meet any conditions stipulated by the US Bank. Active duty military personnel qualifying for this program can use power of attorney but may be required to provide the "Alive and Well" letter. That said, lenders should source more information about the power of attorney requirements from their title company or closing agents.
- Tax-Exempt Rider – this is required for all the FL Bond first mortgage loans. This document is available with the eHousing portal. Title companies/ settlement agents must record the tax-exempt rider with the first mortgage. If this document isn't recorded or is recorded with the second mortgage instead, the loans will be stopped, and the re-recording charges will apply.
FL Bond Loan Programs come with a couple of fees charged as first mortgage program fees. These fees include:
A tax service fee of $80, paid to the Core Logic Tax Services.
Compliance fee of $225 paid to the eHousing for loan reservations.
A funding fee of $400, which should reflect as the investor funding fee on the Loan Estimate/ Closing Disclosure document.
Standard and customary origination fees, charged by the lender.
1% origination and 1.5% SRP as part of the lender compensation package.
Realtor commission fee, which can only be paid by the buyer using their own funds. NB: FL Housing funds can only be used to pay down payments and standard closing fees. That said, Realtor commission isn't considered a standard buyer cost in FL.
- Realtor transaction fee, which the borrower can pay, but it must not exceed $400.
FL Bond Program Documents
Throughout the FL Bond loan origination process, certain documents are a must-have. These documents include:
- The notice to buyer document
- The Recapture Tax Brochure
- Mortgagor Affidavit
- US Bank Privacy Form
- Seller Affidavit
- Borrower Attestation
All these documents are available through the eHousing eHPortal and are needed when applying for the first mortgage loan programs.
The Florida Housing Homebuyer Loan Programs combine government-funded loans (FHA, VA, and USDA-RD) and conventional loan vehicles (HFA Advantage and HFA Preferred). This loan program is divided into the first mortgage programs and the second mortgage programs, which are specifically used for down payment assistance.
To qualify for the FL Housing loan program, borrowers must satisfy a couple of requirements. Most of these requirements seek to select only the borrowers who actually need financial assistance when purchasing their first homes. Some of the requirements, such as the first-time homebuyer restriction, have some exceptions. These exceptions exempt only veterans and those buying a property in federally designated targeted areas.
Before taking the loan, borrowers must receive the homebuyer education program that comes with a certification. Similarly, there's a restriction on the type of property the homebuyers can finance with the Florida Housing funds. Important loan closing information is also provided to guide lenders and homebuyers not only while closing the loans but also in case of any issues with their purchased property in the future.
Standard Programs fees are also charged at different stages throughout the loan origination process. Some of these fees, such as the realtor commission fee, cannot be paid using the FL Housing funds, so the borrower must incur some of the cost.