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Florida Hometown Heroes Program - The Complete Guide

On May 23rd, Florida Governor Ron de Santis announced the June 1st launch of the Florida Hometown Heroes Program, which will help Floridian community workers buy a first home in their communities.

The Hometown Heroes Housing Program, which the Florida Housing and Finance Corporation administers (FL Housing), will be available to eligible full-time workforce, employed by a Florida-based employer.

Florida's median house prices have increased by more than 58 percent over the past six years. Despite this significant growth, household incomes have stagnated, making it difficult for most people to keep up with the rising property prices. As Florida's housing crisis worsens, many community workers find it difficult to purchase a house.

Fortunately, the introduction of the Florida Hometown Heroes Housing Program is projected to offer relief to these community workers by allowing income-qualified homebuyers to secure zero-interest loans and down payments and closing cost assistance through affordable second mortgages.

This program make it easier for more first-time homebuyers in Florida to purchase a home. Eligible community workforce will be able to put down a smaller down payment, which will make their monthly mortgage payments more affordable and will also have access to a lower interest rate on their first mortgage..

In this guide, we explore the features of the Hometown Hero Housing Program, including the home loan products available, the occupations that qualify, and other eligibility requirements. Read on to find out more about this groundbreaking program.

Florida Housing Finance Corporation - Homes For Hometown Heroes

FL Hometown Heroes First Mortgage Programs

FL Housing offers three government and two conventional loan programs that eligible workers can qualify for through the Hometown Heroes Housing Program. Here is an overview of the various mortgage products available in the Hometown Heroes Program:

  • The Florida First Heroes (FL First) - Under this program, prospective homebuyers can qualify for 30-year, fixed-rate, FHA, USDA-RD, or VA mortgage loans. Borrowers who qualify for this first mortgage program are automatically eligible to receive down payment assistance through a second mortgage.

  • FL HFA Preferred Heroes For TBA (Fannie Mae) - This mortgage program offers qualifying borrowers a 30-year fixed-rate mortgage. With this mortgage offering, borrowers below 80% of the average median income (AMI) can benefit from reduced private mortgage insurance (PMI) premiums. Likewise, eligible borrowers automatically qualify for the down payment and closing cost assistance via a second mortgage.

  • FL HFA Advantage Heroes For TBA (Freddie Mac) - Eligible borrowers of this program can receive a 30-year, fixed-rate mortgage with reduced cost PMI for applicants with a median income not exceeding 80% of the AMI. Like the aforementioned first mortgages, qualifying applicants of this mortgage program are eligible for the down payment and closing cost assistance through a second mortgage.

FL Hometown Heroes Second Mortgage

As highlighted before, prospective homebuyers who qualify for the FL Hometown Heroes TBA First Mortgage loans are eligible to receive down payment and closing cost assistance in a 0%, non-amortizing, 30-year, repayable second mortgage.

This second mortgage is equal to 5% of the value of the first mortgage and is capped at $35,000.

It is worth noting, however, that this second mortgage is non-forgivable, and the borrower will be required to repay the outstanding mortgage balance in full if :

  • They complete payment on the first mortgage.
  • They refinance the first mortgage.
  • Transfer the deed of the property.
  • No longer occupy the property as their primary residence.

Who Can Qualify For FL Housing Hometown Heroes First Mortgage?

As highlighted at the outset, the Hometown Heroes Housing Program is designed to help eligible community workers secure home financing assistance through various first mortgage programs and down payment and closing cost assistance via second mortgages.

If a borrower is employed full-time (must document 35+ hrs. per week) by a business located in Florida, meets Program requirements, and can credit qualify for a mortgage, many more First Time Homebuyers should be able to qualify for this program. There is no occupational requirement.

Entrance to a villa in Florida

FL Housing Hometown Heroes First Mortgage Eligibility Requirements

There are several requirements that applicants must satisfy to be considered eligible for a first mortgage in the Hometown Heroes Housing Program. These include:

First Time Homebuyer Requirement

An applicant must be a first-time homebuyer to be considered for the FL Housing Hometown Heroes program. This implies they shouldn't have shown any ownership interest in a primary house in the three years leading up to the execution of the Mortgage Loan.

However, active military service members and veterans are exempted from this standard and need not be first-time homebuyers to qualify for the program.

A Veteran is defined as "anyone who has served in the active military, naval, or air service and was dismissed or released under terms other than dishonorable." This veteran's exception applies to all of FL Housing's programs.

Income Limit Requirement

To be eligible for the Hometown Heroes Housing Program, applicants must meet the qualifying income requirements stipulated by FL Housing.

The income limit puts a cap above which an individual cannot qualify for a mortgage. This ensures that low and medium-income earners qualify for the mortgage program.

The Hometown Hero Housing Program will be accessible to first-time homebuyers with incomes of no more than 150 percent of the state or local median income when the loan is given. Some of the income types that are factored in when determining qualifying income include:

  • Employees' Salary/ Hourly Wages
  • Earnings from self-employment
  • VA Payments
  • Overtime earnings
  • Alimony and child support payments
  • Social security income
  • Retirement income
  • Dividends
  • Interest from investments

Credit Requirements

Having a good credit score is critical when applying for any mortgage since it shows your lender that you can repay the loan on time. This is why most mortgage programs have credit limit requirements for their loans.

Depending on the mortgage you are applying for in the Hometown Heroes Housing Program, you'll need to have a particular FICO score to be considered eligible.

If you're applying for the FL Hometown Heroes First Mortgage Loan For TBA (FHA, VA, and USDA-RD), you need a minimum FICO score of 640.

On the other hand, if you're applying for an HFA Preferred loan for TBA (Fannie Mae) or an HFA Advantage loan for TBA (Freddie Mac), you must have a FICO score of 640 or higher depending on your mortgage provider.

It is worth noting that shopping for a mortgage can reduce your credit score by a few points due to credit inquiries by lenders.

These typically occur when prospective mortgage lenders perform a hard credit check on your credit report through a credit bureau. A single hard credit inquiry can reduce your credit score by 5 points.

So, if your credit score is equal to the minimum credit score for a mortgage, shopping for a mortgage from different lenders can lower your score by several points and potentially make you ineligible for a Hometown Heroes Mortgage loan.

For this reason, it is essential to work on building up your credit score before you start applying for a mortgage. Here are some of the ways you can do that.

Avoid Taking On New Loans

If you're in the process of buying a new house with a mortgage, it's best to avoid applying for any additional loans or credit cards until the mortgage is secured.

When you seek additional credit or take on extra debt, your chances of defaulting on your loans increase dramatically. This may make potential mortgage lenders skeptical of your creditworthiness, discouraging them from granting you a loan.

Consequently, when submitting applications to potential mortgage lenders, you should keep your credit reports as clean as possible. This involves postponing new credit applications until the mortgage loan is fully secured.

Clear Your Credit Card Debts

If your credit rating isn't entirely rosy, paying off your credit card obligations is one of the best strategies to raise it.

If you can pay off all of your bills at once, your credit score will immediately increase, and your mortgage prospects will significantly improve.

This, however, may not be possible in a short amount of time. In this situation, it's best to plan how you'll handle your credit card payments ahead of time.

Debt consolidation is one of the best options you should think about. This type of debt refinancing takes out a new loan to pay several consumer bills and other obligations. Put another way, you combine numerous debts into one and pay them off in a single lumpsum payment.

If your FICO score isn't high enough to qualify you for a lower interest rate, consolidating your debts may not be a good idea.

If you have a number of high-interest loans to pay off each month, debt consolidation is a good idea since you'll have a reduced interest rate and fewer payments to worry about.

However, if your credit score has improved after you applied for the original loans, this technique may be viable.

Similarly, you may want to investigate debt consolidation if you haven't addressed the underlying issues that led to your current obligations, such as overspending.

Using a debt consolidation loan to pay off many credit cards is not an excuse to build up additional debt, as it can cause you more significant financial challenges down the line.

Try To Pay Your Monthly Bills On Time

One of the most effective strategies to improve your credit score is to make on-time payments. Generally, at least 35% of your FICO score is based on your payment history.

As a result, even a single late or missing payment can harm your credit score and make it more challenging to be approved for the mortgage you want.

To avoid this, make a habit of paying your home energy bills, telephone bills, and any personal debts you may have on time for a few months before applying for a mortgage.

You can consider using technology to assist you in completing timely bill payments if this is a problem. For example, automated electronic payments can assist you in avoiding getting behind on your bills.

DTI Requirements

Prospective homebuyers applying for mortgages in the Hometown Heroes Housing Program must satisfy specific DTI requirements to qualify for the different types of loans offered.

  • Maximum 50% DTI with AUS A/E
  • Maximum 43% DTI with manual underwrites
  • Maximum 45% DTI with manufactured housing

Homebuyer Education Requirement

All Hometown Heroes Mortgage Program applicants must complete a pre-purchase homebuyer education course that meets the standards set by the Housing and Urban Development Department (HUD) or the National Industry Standards for Homeownership Education and Counseling.

Participating lenders are charged with providing this education course either directly or in partnership with a mortgage insurance business.

Certificates of completion are valid for two years from the date of completion. Post-closing education is unacceptable, and borrowers are required to move into the house within 60 days of the closing date.

Purchase Limits

This clause establishes a ceiling on agreed-upon purchase prices or the prices of available residences for sale.

In other words, you can't use the FL Hometown Heroes mortgage loan to pay more than the maximum amount allowed for various types of property across Florida.

The maximum purchase price varies by county and by area within a county.

Property Requirements

As a general rule, all mortgage products offered in the Hometown Heroes Housing Program can only be used to purchase primary homes.

They cannot be used to refinance pre-existing mortgages or purchase properties meant for other purposes such as business.

Some of the property types that a borrower can purchase using these loans include:

  • Attached or Detached 1-unit dwellings, including townhouse
  • 2 - 4 unit property
  • Condos
  • Manufactured Housing (1994 or newer)

Florida Tax Exemption Benefits

One of the top benefits of using the Hometown Heroes Program is tax exemption, saving you thousands of dollars.

Under Section 420.513(1) of the Florida Statutes, this program provides an exemption from documentary stamp tax and intangible tax for first and second mortgages and notes used to secure loans for housing financed through Florida Housing's Homebuyer Programs.

This means that when you purchase a home through these programs, you won't have to pay the documentary stamp tax and intangible tax on your mortgage, saving you a substantial amount of money.

The Florida documentary stamp tax is a real estate transfer tax levied at a rate of $0.70 per $100 paid for the property in most counties, except Miami Dade, where it is $0.60 per $100.

With the Hometown Heroes Program, you can exclude this tax when you meet the program's criteria. Additionally, the Florida intangible tax, which is calculated at 2 mills per dollar of the note's just value secured by the mortgage, is also exempted.

For each $100,000 of your home purchase price, this exemption can potentially save you approximately $2,000 in documentary stamp tax and intangible tax.

FL Housing Hometown Heroes Mortgage Fees

You need to be aware of various fees associated with the FL Housing Hometown Heroes First Mortgage Program when applying. These are:

  • $400 Investor Funding Fee (payable to Master Servicer)
  • $275 Compliance Fee (payable to eHousing)
  • $75 Tax Service Fee (payable to Master Servicer)
  • $10 Flood Certification Transfer Fee (payable to Master Servicer)

Documents to Determine FL Housing Hometown Heroes Qualification

The lender is responsible for collecting and validating the following documents to determine if the borrower qualifies for the Program:

  • Fully executed HTH Loan Program Certification.
  • Copy of VOE validating currently employed, 35 hours or more a week.

Title Insurance and Power Of Attorney

Title insurance is intended to protect house purchasers and lenders from financial losses resulting from issues with property ownership, such as title problems.

The majority of homebuyers will purchase title insurance to protect themselves from risks, such as wrongful ownership, falsified documentation, and faulty records. HOWEVER, title insurance is expressly prohibited with FL Housing Hometown Heroes Second Mortgages.

Another legal option to consider while looking for First and Second Mortgage loans is the Power of Attorney. This is a valid but restricted legal document that permits a property owner to approve someone else to purchase or sell your house on their behalf.

Power of Attorney is allowed under the Hometown Heroes First Mortgage Program but only if the borrower satisfies the VA, FHA, USDA, or GSE's specifications and any US Bank limitations. Additionally, military personnel must provide an "Alive and Well" letter.

In Conclusion

Community workers in Florida who dedicate their lives to helping the community in various capacities deserve to live in safe and sustainable environments.

However, rising housing costs and stagnating incomes have made it almost impossible for most essential workers to afford homes in recent years.

Fortunately, the new Hometown Heroes Housing Program aims to change that by making housing more accessible for community workers.

They will be eligible for the down payment and closing cost assistance on the mortgages, but they will also have the opportunity to enjoy property tax exemptions.

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