Financing Guide
Let's be real — financing a home can feel like everyone's speaking a different language. Rates, points, PMI, DTI, pre-approval, underwriting... it's a lot. But it doesn't have to be confusing. I've put together this guide to help you understand the basics, know what to expect, and connect with a lender who actually explains things instead of throwing jargon at you.
3.5%
Minimum FHA down payment
580+
Minimum FHA credit score
30–45
Days from offer to closing
$10K
FL Assist down payment help
This is the single most important step, and it's way easier than people think. Pre-approval is when a lender reviews your finances and commits to lending you a specific amount. It's not the same as pre-qualification (which is basically a guess based on what you tell someone over the phone).
In South Florida's market, homes in the $300K–$600K range can get multiple offers. Sellers want to see a pre-approval letter — it tells them you're serious and you can actually get the loan. Without one, your offer might not even get looked at.
Income & Employment
2 years of tax returns, W-2s, or pay stubs. Stable employment history helps. Self-employed borrowers need additional documentation — a good local lender will walk you through what's needed.
Debt-to-Income Ratio (DTI)
Your total monthly debt payments divided by gross monthly income. Lenders want this under 43–45%. Student loans, car payments, and credit cards all count. A lender can help you calculate this before you even apply.
Credit History
Payment history (35% of your score), credit utilization (30%), length of history (15%), new credit (10%), and credit mix (10%). Don't panic if your score isn't perfect — different loan types have different minimums.
Assets & Savings
Lenders want to see that you have reserves — typically 2-3 months of mortgage payments in savings after closing. Gift funds from family are acceptable with proper documentation. Down payment assistance programs can also help here.
My advice: Get pre-approved before you start looking at homes, not after you find one you love. It makes everything easier — you'll know your budget, you'll move faster when you find the right place, and sellers will take you seriously.
There are five main loan types you'll encounter in South Florida. Here's what each one actually means and who it's best for:
Best for: Borrowers with good credit and 5-20% to put down. Can avoid PMI with 20% down.
Most flexible. Can be used with HFA Preferred programs in Florida for reduced mortgage insurance.
Best for: First-time buyers with limited savings or lower credit scores. Very popular in South Florida.
Mortgage insurance (MIP) is required for the life of the loan with less than 10% down. Can be combined with FL Assist down payment help.
Best for: Active military, veterans, and eligible surviving spouses. Best loan deal available.
No down payment, no PMI, competitive rates. Florida has a large veteran population and many VA-savvy lenders.
Best for: Buyers in eligible rural/suburban areas. Parts of western Palm Beach County qualify.
Income limits apply. Guarantee fee required but can be rolled into the loan. Less common in South Florida but available.
Best for: First-time buyers in Florida who qualify through income limits. Best combined with FL Assist.
HFA Preferred and HFA Advantage programs offer reduced MI and can be paired with down payment assistance. See our buyer guide for details.
Fixed-rate mortgage: Your interest rate stays the same for the entire loan term — 15, 20, or 30 years. Your monthly payment never changes (except for taxes and insurance). This is what most people choose because it's predictable and safe.
Adjustable-rate mortgage (ARM): The rate is fixed for an initial period (usually 5, 7, or 10 years), then adjusts periodically based on market rates. ARMs often start with a lower rate, which can save you money if you're planning to sell or refinance before the adjustment kicks in. But they're riskier — if rates go up, your payment goes up too.
For most first-time buyers in South Florida, a 30-year fixed-rate loan is the safest bet. The monthly payment is lower than a 15-year, and you won't get surprised by a rate increase down the road.
The biggest myth in home buying is that you need 20% down. That's been wrong for decades. Here's the reality:
The average down payment for first-time buyers is actually around 6–7%. FHA loans require as little as 3.5%. Conventional loans can go as low as 3% through some programs. VA and USDA loans require zero down.
Family members can gift you money for a down payment and closing costs. Lenders just need a "gift letter" confirming it's not a loan. The rules vary by loan type — FHA and conventional both allow gift funds.
Florida Housing's programs are legitimate and have helped thousands of people buy homes. The FL Assist program offers up to $10,000 as a deferred second mortgage — you don't make monthly payments, and it's forgiven when you sell or refinance in many cases.
| Loan Type | Min Down Payment | On a $350K Home |
|---|---|---|
| VA | 0% | $0 |
| USDA | 0% | $0 |
| FHA | 3.5% | $12,250 |
| Conventional (3% programs) | 3% | $10,500 |
| Conventional (standard) | 5% | $17,500 |
Down payment assistance through Florida Housing can reduce or cover these amounts for eligible buyers.
On top of your down payment, you'll need to cover closing costs. In South Florida, buyers typically pay 2–5% of the purchase price in closing costs. On a $350,000 home, that's $7,000–$17,500.
What the lender charges to process your loan
Lender's title policy, title search, and closing fee
Lender-ordered home appraisal to confirm value
General inspection + wind mitigation for insurance
Property taxes, homeowner's insurance, prepaid interest
County fees and boundary survey
Want a more precise estimate?
Use our closing cost calculator for a personalized breakdown.
Credit scores matter, but they're not the barrier most people think. Here's the reality:
| Score Range | What You Can Get |
|---|---|
| 760+ | Best rates available. All loan types open. Most favorable terms. |
| 700–759 | Good rates. Conventional, FHA, VA all available. Minor rate premium vs. 760+. |
| 660–699 | Still solid. FHA and conventional available. Slightly higher rates. |
| 620–659 | FHA and some conventional loans available. Focus on improving score if possible. |
| 580–619 | FHA available (3.5% down). Limited conventional options. Work on credit for 6-12 months if possible. |
Pay everything on time
Payment history is the biggest factor (35% of your score). Set up autopay or reminders for every bill.
Keep credit utilization under 30%
If your credit limit is $10,000, try to keep your balance under $3,000. Lower is better — under 10% is ideal.
Don't open new accounts before applying
Every hard inquiry dings your score a few points. More importantly, new credit signals risk to lenders. Wait until after closing to finance that car or open a new card.
Check your credit report for errors
Go to AnnualCreditReport.com (free once a week through 2026) and dispute any mistakes. Even a small error can drop your score 20–30 points.
Pro tip: Even a 20-point improvement in your credit score can save you thousands over the life of a loan. If you're close to the next tier, it may be worth waiting 3–6 months to improve your score before applying. A good lender can help you figure out where you stand and what to work on.
Florida has some of the best first-time buyer programs in the country. If you haven't owned a home in the last 3 years, you may qualify for significant help. Here's what's available:
These are 30-year fixed-rate conventional loans offered through the Florida Housing Finance Corporation (FHFC). HFA Preferred offers reduced mortgage insurance costs — a big monthly savings. HFA Advantage is similar but for FHA loans. Both can be combined with down payment assistance. Income limits apply — in Palm Beach County, households earning up to ~$109,000 may qualify (check current limits as they change yearly).
Provides up to $10,000 as a deferred second mortgage for down payment and closing costs. You don't make monthly payments — the loan is due when you sell, refinance, transfer the deed, or finish paying off your first mortgage. This can be combined with HFA Preferred or other qualifying first mortgage programs. It's real, it's legitimate, and it's helped thousands of Florida families buy homes.
Specifically for teachers, law enforcement officers, firefighters, healthcare workers, and military/veterans. The SALUTE program offers special rate discounts on Florida Housing first mortgage loans. If you or your spouse work in one of these fields, this can save you real money over the life of your loan.
An MCC lets you claim a tax credit of up to 50% of your annual mortgage interest (up to $2,000 per year). This is a dollar-for-dollar reduction in your federal tax bill — not just a deduction. It can be combined with other Florida Housing programs. The credit can be carried forward if it exceeds your tax liability.
Not sure if you qualify? That's what I'm here for. I can connect you with a lender who knows these programs inside and out and can help you figure out what you're eligible for. It's free to check, and there's zero pressure.
Ask Ryan About ProgramsYou can get a mortgage from a bank in another state, an online lender, or a call center. But in South Florida, things move fast, and having a local lender who knows the market makes a real difference.
Local lenders know which appraisers are reliable and which ones take forever. They know the specific requirements different condo associations have (some are a pain to get approved for). They can close faster because they're in the same time zone and can meet you in person if something needs to be signed.
And honestly? The best reason to use a local lender is that you can call them. When you're stressed about whether your rate locked on time or whether your documents went through, you want to talk to a real person who knows your name.
I work with Austin Edwards at Ocean Blue Lending, and he's helped dozens of my clients get into their homes with great rates and a smooth, no-stress process. He's a local guy who knows South Florida's market, and more importantly, he actually explains things instead of throwing jargon at you.
Whether you're a first-time buyer with a ton of questions, self-employed and need help figuring out documentation, or just want to know what you qualify for before you start looking — Austin can help. And if you're not sure what you need, he'll walk you through it.
These are the questions I hear most often from buyers. If yours isn't here, just ask.
A good rule of thumb is the 28/36 rule: your monthly mortgage payment should be under 28% of your gross monthly income, and your total debt payments (including the mortgage) should stay under 36%. For example, if your household earns $6,000/month, your mortgage payment should be around $1,680 or less, and total debt under $2,160. A lender will give you a more precise number during pre-approval.
Pre-qualification is a quick estimate based on what you tell a lender — it's not verified. Pre-approval is the real deal: the lender pulls your credit, reviews your income and assets, and commits to lending you a specific amount. In South Florida's competitive market, sellers expect a pre-approval letter, not just a pre-qualification.
From application to closing, expect 30–45 days for most purchase loans. The first 1–2 weeks involve processing and underwriting. Then you'll get a "clear to close" and schedule your closing date. Refinances can take a bit longer — 45–60 days is common. Working with a local lender who knows South Florida appraisers can help keep things on schedule.
Yes — if you're happy with the rate you're offered. A rate lock guarantees your interest rate for a set period (typically 30–60 days). If rates go up, you're protected. If they drop, you might miss out — but you can ask about a "float-down" option. Most lenders let you lock after you have an accepted offer on a home.
It's not the end of the road. FHA loans allow scores as low as 580 with 3.5% down. Some conventional loans go to 620. If you're below 580, focus on improving your credit for 6–12 months — paying down balances, disputing errors, and making all payments on time. I can connect you with a lender who will give you honest advice about where you stand.
Yes — if you qualify for a VA loan (for veterans and active military) or a USDA loan (in eligible areas). Conventional loans with 0% down are rare, but some credit unions and community banks offer them. For most buyers, the realistic minimum is 3–5% down. The good news: Florida has down payment assistance programs that can help with the rest.
Points (discount points) are fees you pay upfront to lower your interest rate. One point costs 1% of your loan amount and typically reduces your rate by 0.25%. Whether it's worth it depends on how long you plan to stay in the home. If you'll be there 5+ years, buying points can save you money. For a shorter stay, skip them.
Your debt-to-income (DTI) ratio is the biggest factor lenders look at after your credit score. It compares your monthly debt payments (car loans, student loans, credit cards, and the new mortgage) to your gross monthly income. Most lenders want DTI under 43–45%. If yours is higher, you may need to pay down debt or consider a lower-priced home.
If you put less than 20% down on a conventional loan, you'll pay private mortgage insurance (PMI) — typically $50–$150/month on a $300K loan. FHA loans have mortgage insurance premium (MIP) regardless of down payment. The good news: PMI on conventional loans drops off automatically once you reach 78% loan-to-value. VA loans have no PMI at all.
Florida Housing offers several programs through the Florida Housing Finance Corporation (FHFC). The FL Assist program provides up to $10,000 as a deferred second mortgage (no monthly payments). The HFA Preferred and HFA Advantage loans offer reduced mortgage insurance. The SALUTE program helps teachers, first responders, and healthcare workers. Income limits apply — my recommended lender can help you check eligibility.
Let's figure out your financing
Fill out this form and I'll reach out to help you understand your options — whether you're ready to get pre-approved or just want to know what's realistic.
Whether you're pre-approved and ready to go, or just starting to figure out what you can afford — I'm here to help. Call me, or reach out to Austin Edwards at Ocean Blue Lending directly.
Ready to buy? Visit SouthFloridaBuyerGuide.com for affordable neighborhood guides and financing help.
Insurance, taxes, maintenance — everything South Florida homeowners need to know.
Download Free Guide