For homeowners looking to refinance their mortgage, the first mortgage programs are an excellent option.
These mortgages are available for single-family homes, condominiums, townhouses, and multi-unit dwellings.
They can be secured by the borrower's home equity, which means they’re granted based on an individual's credit score and ability to repay the loan.
There are many advantages to taking out a first mortgage program, even if you have an unconventional credit history or lack financial stability.
This article will discuss all the essential things you need to understand about the first mortgage programs. Read on to learn more.
What is A First Mortgage?
A first mortgage is a real estate loan that provides the borrower with 100% financing for a property. This means that you’ll not need to put any money down as long as the lender deems your credit score reasonable enough.
In most cases, people use this type of loan when purchasing their first home or refinancing an existing mortgage.
First mortgages are also known as "purchase" loans because they allow people to buy a home without out-of-pocket money.
The first mortgage programs are the most significant investment someone will ever make in their life. So it's vitally important to understand what each program entails before applying for one.
The 3 First Mortgage Programs
Florida Housing provides three various first mortgage programs, including government and conventional loan programs.
These programs are available to all eligible first-time homebuyers in federally designated counties in FL. Borrowers must qualify as first-time homebuyers and satisfy specific requirements for the first mortgage programs that provide down payment assistance.
Let's take a quick look at each program and its requirements:
The Florida First (FL First) (Government Program)
This program provides eligible borrowers with a 30-year, fixed-rate mortgage.
Those who qualify for this program automatically qualify for down payment assistance (DPA) through the Florida Assist program (FL Assist) or Florida houseownership Loan Program (FL HLP).
The FL HFA Advantage Conventional Loan Program
It also provides eligible borrowers with a 30-year, fixed-rate mortgage.
Borrowers with an income at or below 80% of AMI as defined by Freddie MAC get reduced Mortgage Insurance (MI) premium. Those with an income above 80% AMI aren't eligible for the HFA Advantage.
Borrowers who qualify for this program will automatically be eligible for down payment assistance through FL HLP or Fl Assist second mortgage program.
The FL HFA Preferred (HFA Preferred) Conventional Loan Program
It provides qualified borrowers with a 30-year, fixed-rate mortgage and a reduced mortgage Insurance premium to those with an income at 80% AMI.
Borrowers with above 80% AMI are also eligible but must pay the standard mortgage insurance.
The eligible borrowers under this program automatically qualify for down payment assistance through FL HLP or FL Assist second mortgage program.
Program Requirements
These programs have been around for many years, and to qualify; you must meet some strict requirements.
The requirements have changed over the years, and understanding them can be helpful for those looking to buy a house through the first mortgage programs.
Below are the current requirements you need to meet to qualify for one of these programs:
First Time Homebuyer Requirement
The borrower or the spouse (if applicable) must not have had an ownership interest in a principal property within three years before the date when the loan is issued.
However, if the borrower or spouse meets one of the below exceptions, they can be eligible for one of the three programs:
Veterans Exception - Veterans must be first-time homebuyers who served in the army, navy, or air force and got discharged through official conditions except for dishonorable discharge. Borrowers who meet this qualification must also provide proof that they meet the defined Mortgagor Affidavit requirements.
Federally Designated Target Area Exception - Borrowers looking to purchase a property from Federally Designated Target Areas are exempt from meeting the First-Time Homebuyer requirement.
Income Limit Requirements
Eligible borrowers shouldn’t exceed the maximum income limit requirements as described by household size and the respective county in which the house is being purchased.
Purchase Price Limit Requirements
The contracted purchase price must not exceed the purchase price limits in the county where the borrower intends to buy the property.
Other Requirements
Borrowers should have a minimum of 640 FICO scores. Borrowers must also satisfy all Agency requirements and any eligibility requirements imposed by US Bank.
Bottom Line
The first mortgage programs were created to help homebuyers with the purchase of their new house. They offer competitive rates and flexible terms, making them one of the most popular providers in Florida and other states.
It’s an excellent way for individuals without much savings and who have good credit scores but lack enough income to afford a down payment.
With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.
By Phil Ganz
Edited by Ryan Skerritt
