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What You Need to Know about Florida Housing Finance Corporation's First Mortgage Program Options

Florida Housing Finance Corporation (FHFC) has been serving the state of Florida since 1952. The agency’s mission is to provide opportunities for people with low and moderate incomes to achieve housing stability, independence, and prosperity through safe, decent, affordable homeownership or rental housing.

The FHFC offers a range of first mortgage program options. The available mortgage loans are affordable and easy to qualify for with flexible down payment requirements and competitive interest rates. The corporation is the state’s only statewide, nonprofit housing finance corporation and provides financing to qualified borrowers in all 67 counties in Florida.

These mortgage program options include FHA, VA, and USDA-RD loans. The federal government backs FHA loans, the Department of Veterans Affairs guarantees VA loans, and RD Loans are provided for rural areas through USDA Rural Development Section 502 Direct Loan Program. This article will walk you through all the essential information you need to know about each type of mortgage option to help you decide which best fits your needs. Read on to learn more.

Federal Housing Administration (FHA) Loans

The Federal Housing Administration is a United States government agency created in 1937 to offer home loans with more affordable down payments. It was designed to provide these affordable home loans and protect homeowners from foreclosure. Part of the Department of Housing and Urban Development (HUD), FHA provides homeownership opportunities for millions of families who may not have qualified otherwise.

To make homeownership accessible, the Federal Housing Administration (FHA) offers a wide variety of programs and down payment assistance options. The FHA provides mortgage insurance on loans made by regulated lenders approved by the Department of Housing and Urban Development. This lowers the risks to banks and gives more home buyers access to financing. It also provides mortgage insurance on loans that meet their requirements, making them an excellent option for first-time homebuyers or anyone who doesn't have a large down payment saved up.

Veteran Affairs (VA) Loans

The VA loan, or the Veteran Affairs First Mortgage Loan, is a mortgage program created by Congress to help veterans purchase homes. Veteran Affairs first mortgage loans are an excellent option for those who have served in the military and want to buy a home.

In the earlier days of the United States, many veterans were given land grants from their respective states to help with their financial stability after a long time serving in times of war. The Veteran Affairs (VA) first mortgage loans program was created so that today's Veterans could have access to home loans and purchase homes with no money down.

The VA is a federal program that benefits veterans, dependents, and survivors by financing their home purchases. Some VA benefits include no down payment requirements and flexible credit qualifying guidelines. The United States government guarantees these loans, so they're safe to take on if you don't have good enough credit. The program provides qualified veterans with no-down-payment requirements and flexible qualifying standards such as low-income limits, high debt ratios, and past bankruptcy issues without affecting eligibility.

If you're interested in obtaining one of the available loans through this program, there are many things you need to know before applying. Here are some crucial points to keep in mind when dealing with the VA:

  • You can choose your lender or use an approved list.
  • The interest rate is fixed for 30 years but may change during that period.
  • There is no monthly payment
  • Any unpaid principal will be forgiven if refinanced after 12 months.

The VA loan is a great way for military personnel to get on the path to homeownership without having any out-of-pocket costs or credit score requirements. A VA loan can also be used by active-duty members stationed within 100 miles of an approved lender and by National Guard or Reserve members who have been called up for at least 180 consecutive days under Title 10 orders.

United States Department of Agriculture – Rural Development (USDA-RD) Loans

USDA-RD first mortgage loan program is a type of mortgage loan backed by the U.S. Department of Agriculture, Rural Development (USDA). USDA-RD stands for the United States Department of Agriculture Rural Development. These loans are often called "rural development" or "RD" loans, which explains why they're sometimes abbreviated as RD.

The USDA offers these types of home loans because not all people can qualify for conventional mortgages due to various factors. It's an option for those with low incomes or limited credit history looking to purchase land in rural areas. The program was created by Congress in the 1980s and has been popular since then.

These loans are suitable for borrowers who don't qualify for conventional mortgages because they require less than 20% down payment and can be used to purchase property in rural areas or outside metropolitan statistical areas (MSAs) with populations under 50,000 people. The USDA-RD mortgage Loan program does not require an upfront down payment, and the monthly payments are usually lower than with most other types of loans.

Essential Things to Note About FHA, VA, and USDA-RD Loans

The FHA, VA, and USDA-RD first mortgage programs are three of the most popular loan programs available in the United States. They all offer different benefits and drawbacks, and it's essential to know what they entail before you decide which one to apply for. Below are crucial factors that encompass the three first mortgage program loans:

  • They offer a 30-year fixed rate.

  • They're not eligible for Florida Housing's MCC program.

  • They’re eligible for FL Assist and FL HLP under the Florida Housing Second Mortgage program.

  • Lenders typically confirm purchase pricing rates from eHPortal and eHousingPlus as the rates are subject to change daily.

  • The loans can only be used for purchases but not refinancing.

  • Manual underwriting is permitted only for USDA-RD and VA.

  • The homeowner’s insurance deductible must appear as required by the FHA, VA, and USDA-RD.

  • Borrowers should meet a minimum of 640 FICO requirements. For FHA loans only, the borrowers must have a 660 or lower FICO rating.

  • Co-signers and non-occupying co-borrowers aren’t permitted. However, the occupying borrowers (such as spouses and children with an income) are eligible.

  • Non-citizens applicants must adhere to FHA, USDA-RD, and VA guidelines specific to citizenship requirements and documentation to verify citizenship.

  • Non-purchasing spouses (NPS) and other participants appearing on the deed must also qualify as first-time homebuyers.

  • Any potential cashback to the borrower should be applied as a principal reduction to the first mortgage unless the cashback is from gift funds. Any gift fund may be used for the down payment, closing costs, debt payment to build reserves for the borrower or any other FHA, VA, and USDA-RD approved purpose.

Top Requirements

Borrowers, including non-borrowing spouses, must not have had an ownership interest in their primary residence within the last three years. They must also be first-time homebuyers (FTHB). However, you can be exempt from this requirement if you intend to purchase in Federally Designated Targeted Areas in Florida or qualify under the Veteran’s Exemption.

Exemption from Ownership Interest and First-Time homebuyer - Veterans or borrowers purchasing in Federally Designated Targeted Areas are exempt from the FTHB requirement. For Program purposes, a Veteran is defined as a person who served in the Army, Navy, or Air Force and was discharged or released under clear conditions other than dishonorable.

Bottom Line

The Florida Housing Finance Corporation offers a variety of first mortgage programs to provide homeownership and rental housing opportunities for low and moderate-income individuals and families in urban and rural areas. Whether you're looking for an FHA, VA, or USDA-RD loan, there's a suitable program for you. This blog post explores the basics of these loan programs to help you make an informed decision when applying for your mortgage loan.

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