What the total should include
- Down payment. Conventional loans start at 3–5% down for many buyers, FHA at 3.5%. Below 20% you pay mortgage insurance, so a larger down payment lowers the monthly cost.
- Closing costs. Buyers in Florida usually pay lender fees, title insurance (depending on the county and contract), the doc stamps of $0.35 per $100 and the 0.2% intangible tax on the new mortgage, recording fees and prepaid escrow for tax and insurance. Two to four percent of the price is a common range for a financed purchase.
- A reserve. Lenders may ask to see two or more months of payments left in the bank after closing. Owners also need cash for the hurricane deductible, which is often 2% to 5% of the dwelling coverage.
Help that can shorten the timeline
Florida Housing Finance Corporation offers second mortgages for down payment and closing costs to buyers who use its first mortgage through a participating lender. Current options include FL Assist (up to $10,000 at 0%, deferred, due on sale or refinance), the FL HLP second mortgage ($12,500 at 3% over 30 years) and a 3%, 4% or 5% grant-style second mortgage that is forgiven over five years with its conventional loans. They require a first-time buyer under the IRS definition, county income and price limits, a 640 credit score and a homebuyer education course.
Many cities and counties run their own programs through the SHIP program, so check your county's housing office too.
Where to keep the money
Keep it somewhere that cannot drop in value in the year you plan to buy. Lenders also ask for two months of bank statements and will want large deposits explained, so move money into the account early and keep records of gifts.
Questions
Can a gift from family be used for the down payment?
Yes, on most loan types. The lender will need a signed gift letter and proof of the transfer.
Do I need 20% down in Florida?
No. Many conventional and FHA loans allow 3% to 5% down. Twenty percent avoids mortgage insurance on a conventional loan.
