BUYERS
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MORTGAGE & FINANCING
Home Financing Options in Florida
Understanding your financing options starts with knowing what to ask. This guide breaks down common home loans, down payment assistance, and mortgage costs so you can compare options and prepare for a conversation with your lender.
Common Home Loan Types
Conventional, FHA, VA, and USDA loans have different eligibility rules and costs. Ask your lender which options you qualify for, then compare the monthly payment, money needed upfront, and loan conditions.
Conventional Loans
A conventional mortgage is not insured or guaranteed through a government loan program. You do not always need a 20% down payment, but a smaller down payment usually means paying private mortgage insurance. Ask your lender to compare the rate, fees, monthly payment, and PMI for the down payment you plan to make.
FHA Loans
FHA loans are made by lenders and insured by the Federal Housing Administration. They offer low-down-payment options and may accept lower credit scores than some conventional loans. Mortgage insurance adds to the cost. Ask for an FHA and a conventional quote if you qualify for both.
VA Loans
Eligible veterans, service members, and certain surviving spouses may qualify for a VA-backed loan. These loans can allow no down payment and do not require monthly mortgage insurance. A funding fee may apply unless you qualify for an exemption. Ask your lender about eligibility, closing costs, and any money you still need upfront.
USDA Loans
The USDA Guaranteed Loan Program offers no-down-payment financing to eligible buyers purchasing a primary residence in an eligible rural area. Both household income and the property's location matter. Check the specific address and ask an approved lender about eligibility, program fees, and closing costs.
What to Compare Beyond the Interest Rate
- Is the rate fixed or adjustable?
- What is the total monthly payment, including taxes, insurance, and any mortgage insurance?
- How much cash will I need for the down payment and closing?
- Are points or lender credits included in this quote?
- What could change before closing, and is the rate locked?
What Is a Rate Lock?
A mortgage rate lock generally keeps the quoted interest rate from changing for a specified period, provided the loan closes within that period and important application details do not change. Rate-lock policies, timeframes and extension costs vary by lender, so confirm the terms shown on your Loan Estimate.
Renovation and Construction Loans
Buying a home that needs repairs and building a new home involve different financing. Before committing to a property or project, ask the lender what work is eligible, how the budget is approved, and when funds are released.
FHA 203(k) Renovation Loans
An FHA 203(k) mortgage can combine a home purchase or refinance with eligible rehabilitation costs. The work must meet program rules. Ask the lender which 203(k) option fits the project, whether a consultant is required, and what contractor and completion requirements apply.
Read HUD's FHA 203(k) overview →
HomeStyle Renovation Loans
Fannie Mae's HomeStyle Renovation mortgage combines financing for an existing home with eligible improvements. It is different from financing new construction. Ask a participating lender about eligible projects, contractor requirements, and how the home's completed value affects the loan.
Explore HomeStyle Renovation →
Construction-to-Permanent Loans
Construction-to-permanent financing covers the building stage and the long-term mortgage. Depending on the program, it can involve one closing or two. Ask about builder approval, payments during construction, cost overruns, and the requirements for moving into the permanent loan.
HELOCs and Home Equity
A home equity line of credit, or HELOC, lets a homeowner borrow against available home equity up to an approved limit. You can draw funds during a set borrowing period, then repay under the loan's terms. Rates are usually variable, and payments can rise. Your home secures the debt, so missed payments can put it at risk.
• When does the borrowing period end?
• How will payments change during repayment?
• Can the interest rate change, and are there fees?
• What happens to this loan if I sell the home?
Private Mortgage Insurance (PMI)
PMI is commonly required on a conventional mortgage when the down payment is less than 20%. It protects the lender if you stop making payments. Ask how much it adds to your loan costs and how it is paid. FHA mortgage insurance follows different rules, so compare the full cost of each loan.
Can PMI Be Removed?
For many conventional mortgages, you can request PMI cancellation when the balance reaches 80% of the home's original value, subject to conditions. Automatic termination generally follows when the balance is scheduled to reach 78%, if payments are current. Ask your servicer which rules, documents, and dates apply to your loan.
Down Payment Assistance in Florida
Florida Housing and local housing programs offer assistance to eligible buyers. Availability and requirements vary. Assistance may be a loan that must be repaid, rather than a grant. Before relying on it, ask a participating lender to confirm current funding, eligibility, and repayment terms.
- Do income, purchase-price, or location limits apply?
- Does the program require first-time buyer status or homebuyer education?
- Can it be combined with the mortgage I am considering?
- When is repayment due, including if I sell or refinance?
Getting Pre-Approved
A pre-approval letter tells you what a lender may be willing to lend based on its review. It is conditional, and lenders use the terms pre-approval and prequalification differently. Ask what has been verified, when the letter expires, and what still needs approval. Choose a payment you can afford, even if the lender offers a higher amount.
What to Have Ready
Your lender will provide its own document list. Common requests include:
- Identification and employment information
- Recent income records and tax documents
- Bank or investment account statements
- Information about debts and the source of your down payment
What Is Debt-to-Income Ratio?
Debt-to-income ratio, or DTI, compares your monthly debt payments with your gross monthly income. Lenders use DTI as one factor when evaluating whether you can manage the proposed mortgage payment. Requirements vary by lender and loan program.
What Is Underwriting?
Underwriting is the lender's review of the loan application and supporting information before final approval. The lender may verify income, assets, debts, credit information and property-related requirements and may request additional documentation during the process.
Escrow, Explained
Your Purchase Deposit
During a purchase, an escrow holder keeps your deposit under the terms of the contract. The contract sets the deposit deadline and the conditions for releasing or returning the money. Ask your agent or closing professional to explain those terms before you send funds.
Taxes and Insurance After Closing
A mortgage escrow account collects money with your monthly payment to cover bills such as property taxes and homeowners insurance. Your servicer pays those bills from the account. The escrow portion can change when taxes or insurance costs change, even with a fixed interest rate.
Related Resources
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