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Florida Housing Finance Corporation’s First Mortgage Program Options Fannie Mae HFA Preferred and Freddie Mac HFA Advantage / Loans At-A-Glance

Florida Housing Homebuyer Loan Program offers three first-mortgage loan products. These include a government-funded loan and two conventional loans given to eligible borrowers. To qualify for these loan products, you’ll need to meet all the program requirements.

In this blog post, we’ll discuss the FL Housing’s First Mortgage Program loans: the Fannie Mae HFA Preferred and the Freddie Mac HFA Advantage. You’ll also learn more about the loans’ features, participation restrictions, closing information, among other essential details.

Quick Overview of FL Housing First Mortgage Programs

As stated earlier, First Mortgage Programs are classified into three. These are:

  • The FL First – this is a government-funded loan program that offers qualifying borrowers a 30-year, fixed-rate mortgage.

  • The FL HFA Advantage – this is a conventional loan program that, besides offering qualifying borrowers a 30-year, fixed-rate mortgage, provides income at/or below 80% of the Average Medium Income as determined by Freddie Mac.

  • The FL HFA Preferred – this loan offers qualifying borrowers a 30-year, fixed-rate mortgage plus an income at/below 80% of the Average Medium Income as determined by Fannie Mae.

Borrowers who qualify for any of the three loan products will automatically be eligible for the down payment assistance offerings through the FL Second Mortgage programs (FL Assist or the FL HLP).

With the FL HFA Preferred, you benefit from reduced-cost mortgage insurance (MI) if your income is at or below 80% of the average median income. Charter level MI is also available. That said, income above 80% of the average medium income is allowable, and borrowers will pay standard mortgage insurance.

On the other hand, FL HFA Advantage offers reduced-cost mortgage insurance (MI) if your income is at or below 80% of the average median income. Charter level MI is available, but those with income above 80% of the average medium income aren’t eligible for the HFA Advantage program.

Eligible borrowers who have qualified for FL Housing first mortgage programs aren’t eligible for the FL Housing’s Mortgage Credit Certificate (MCC) Program.

FL HFA Preferred and FL HFA Advantage Loans Requirements

If you want to participate in the FL HFA Preferred and FL HFA Advantage loan programs, there are a couple of requirements you’ll need to satisfy. Most of these requirements apply to the other loan vehicles under the FL Bond Loan Program. Below is a quick summary:

  • First-time homebuyer requirement – Borrower(s), including the non-borrowing spouse and any occupant age 18 and above, must not have had an ownership interest in any primary residence in the last three years leading to the day of signing up with the FL Bond program. However, there are two exceptions to this rule. The first exception is that you are buying a property in a Federally Designated Targeted Area. The second exception is that you are a veteran who has served in active naval, military, or air service and was released or discharged under circumstances other than dishonorable.

  • Income Limit Requirements – The total household income of the borrower(s), the non-borrowing spouse, and any occupant age 18 and above should not exceed the maximum income limit requirements. This is often adjusted for given household size and the county in which the property is located. All the income sources, from formal employment, self-employment, business, interests and dividends, and other sources such as child support and alimony, are used to calculate the household income.

  • Purchase Price Limits – The property’s purchase price should not exceed the purchase price limit, which varies depending on the county the property is located.

  • Other Requirements – Borrower(s) should have a minimum FICO score of 640, satisfy all agency (FHA, USDA-RD, VA) requirements and any additional conditions imposed by US Bank.

The FL HFA Preferred and the FL HFA Advantage loans are meant for home purchases only. Refinances aren’t eligible, and construction to permanent loans are also not permitted. These loan products also pose a maximum loan-to-value (LTV) ratio of 97% and a maximum combined loan-to-value (CLTV) ratio of 105%. These ratios are used to determine the homebuyer’s risk of default. CLTV quantifies the level of risk when more than one loan is used.

FL HFA Preferred and FL HFA Advantage Loans Application Basics

Besides the program requirements, there are several other rules and regulations that borrowers must adhere to. For instance, when applying for these first mortgage loans, random co-signing isn’t permitted. Similarly, non-occupying co-borrowers cannot sign, but anyone occupying the property and is a co-borrower is allowed. That said, the non-purchasing spouse plus any occupant who will appear on the deed must qualify as a first-time homebuyer.

There are also some guidelines set by Government Sponsored Enterprises such as Freddie Mac and Fannie Mae, which specify the citizenship requirements and any documentation needed to support citizenship. Additionally, all first-time homebuyers must complete a pre-purchase homebuyer education course that the FL Bond Loan Program approves. The course should satisfy the standards laid out by the National Industry Standards for Homeownership Education and Counselling or the Housing and Urban Development (HUD).

The Lender should offer this education course either directly or in partnership with a mortgage insurance company. Certificates of completion are valid for two years from the date of completion. Even so, post-closing education is not acceptable. That said, the borrower is expected to occupy the property within the first 60 days of closing.

All the property occupants whose names will appear on the deed must attend the pre-purchase education course unless you qualify under the veteran’s exception or purchase a property in a Federally Designated Targeted Area.

When processing the FL HFA Advantage and the FL HFA Preferred loans, lenders are given a 60-day purchase timeline. An extension fee of 25 basis points (0.25%) will be applied for any loan that’s not eligible for purchase once the 60 days elapse. From here, another 30-day extension will be automatically granted. Any loan purchased after the maximum delivery date is subject to late purchase fees and re-pricing costs. All these costs are netted from the Lender’s service release price (SRP) at loan purchase.

Similarly, lenders are required to confirm the loan’s pricing and rates in the eHousing eHPortal as they are subject to changes daily.

Other Considerations to Keep In Mind

When applying for the FL Bond First Mortgage Programs, there are several property types you can choose from. These include the attached/detached one-unit dwellings, including townhouses, the 2-4 unit properties, condos, and modular housing. Mobile homes or manufactured housing aren’t permitted with conventional loan products.

The LTV limits for each of these property types vary. For 2-4 unit houses, the LTV cannot exceed 95% and requires a 3% minimum borrower contribution. Condos can have LTVs from 95.01% to 97%, provided US Bank approves them.

FL Bond First Mortgage Programs are exempt from Doc Stamp and Intangible Tax. A power of attorney (POA) is also permitted when closing the loan, provided all the agency and US Bank’s requirements are satisfied.

Tax-Exempt Rider is another requirement for all the FL Bond First Mortgage loans. Settlement agents/ title companies must record this document available through the eHousing eHPortal, failure to which the first loans can be stopped, and re-recording charges may apply.

Bottom Line

FL First Mortgage loans offer borrowers who need financial aid the opportunity to benefit from low-interest loans to purchase their first primary residential property. To qualify for the loan, you need to meet all the program’s requirements and adhere to the other regulations imposed by the FHA or the US Bank.

The FL HFA Advantage and the FL HFA Preferred loans also come with some fees in the form of a tax service fee, compliance fee, and lender fee. Others are funding fees, lender compensation fees, realtor commission, and realtor transaction fees.

To complete the application, you’ll need to download some documents from the eHousing eHPortal. These documents include Notice to Buyer, US Bank Privacy Form, Recapture Tax Brochure, Tax Exempt Rider, Mortgagor Affidavit, and Seller Affidavit.

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