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How to Buy a House in Florida: A Homebuyer’s Guide

The average Florida home is worth about $406K, up about 25% in the last year and higher than the national average of $365K. Cost is a primary consideration when purchasing a home, but you must also consider other factors, such as mortgage lending terms.

To help you navigate the process and avoid excessive debt, MoneyGeek outlined the steps to buying a home in Florida. As part of our analysis, we cover mortgage rates, location selection and home inspections.

KEY TAKEAWAYS

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Florida’s average home costs $406,876, an increase of 25% over the past year.

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Homebuyers must meet certain credit standards, debt-to-income ratios and income requirements to take out a mortgage. Also, buyers are usually required to pay a down payment upfront.

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Buying a home in Florida involves identifying the right location, calculating interest rates, getting pre-approved and having a home inspection before closing.

WHAT WE’RE GEEKING OUT ON

Choose an Ideal Location

Location is important when determining how much a Florida house will cost. According to 2022 data, the median home price in Brooksville is $329,737, whereas the average home price in Masaryktown is $241,288.

When choosing the best place to buy a house in Florida, you’ll need to consider other factors besides cost, such as lifestyle, neighborhood amenities and the area’s cost of living.

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WORK WITH A REAL ESTATE AGENT

Purchasing a home that meets your needs and budget can be overwhelming. If you are unsure of how to buy a house in Florida, consult a real estate agent. An agent will guide you through finding and touring homes and negotiating with the seller.

Ask family and friends for real estate agent recommendations. MoneyGeek suggests looking for an agent with the following qualities:

  • Has a comprehensive understanding of local housing markets
  • Proven track record of honesty
  • Ability to communicate clearly

Your homebuying priorities will ultimately determine which agent is right for you.

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CALCULATE THE COST OF LIVING

Costs of living can vary greatly depending on where you live in Florida. When looking for the least expensive place to buy a house in Florida, remember that living costs in a particular area will also be a factor.

Your living expenses should be taken into account when choosing a location, such as:

  • Utilities
  • Food
  • Gas or transit passes
  • Auto insurance
  • Education
  • Entertainment
  • Medical insurance and healthcare
  • Taxes on income, property and real estate

Use MoneyGeek’s cost of living calculator to calculate how the cost of living varies among Florida locations.

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CONSIDER AFFORDABLE NEIGHBORHOODS

Compared to the national average of 100, Florida has a cost-of-living index of 105, one of the highest in the country. Choosing a home in an affordable area will allow you to save money on expenses.

While suburban living is more affordable, hospitals, schools, malls and other social amenities are limited. Despite their higher cost, cities offer a wide range of amenities. You should carefully weigh property prices and living costs before choosing a place to live.

Some of the most affordable neighborhoods in Florida are Jacksonville, Cape Coral, Gainesville, Dade City and Dunedin.

Calculate Mortgage Rates

You should understand the mortgage rates available to you when looking to buy a home in Florida. Consider your profile and needs when deciding which mortgage option is best for you. Different mortgage options offer different rates.

You may qualify for a larger mortgage and lower interest rate based on your income, credit history and debt-to-income ratio. You can also compare lenders to find the best mortgage rates for your profile.

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SEE YOUR MORTGAGE OPTIONS

Several types of mortgages are available to Florida homebuyers, each with different rates, eligibility requirements, terms and limits.

Before making a decision, consider your credit score, job history, debt-to-income ratio and income. Depending on your preferred lender, you may need to meet specific requirements.

Each loan type has an average interest rate as follows:

Be sure that you qualify for the loan type before you apply. The VA loan program, for example, is only available to military personnel and their families.

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USE A MORTGAGE CALCULATOR

Know what kind of mortgage you can afford before looking at homes. MoneyGeek’s mortgage calculator can help you estimate your mortgage based on your situation and financial background. MoneyGeek’s FHA vs. conventional loan calculator can also help you decide which loan type is best for you. Whether you are a first-time buyer or need housing assistance, make sure you compare your financing options.

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KNOW YOUR QUALIFICATIONS

Each lender has different requirements, terms and limits but typically assesses your mortgage application based on the following factors:

  • Credit score: Most lenders prefer borrowers with fair or good credit scores, although this depends on the loan type.
  • Gross income: Your earnings usually reflect your ability to repay your mortgage.
  • Debt-to-income (DTI) limits: These limits indicate how much of your income is used to pay off outstanding debts.
  • Down payment: Your ability to pay upfront indicates your risk to the lender.

Prepare Down Payment Requirements

The down payment requirements for different types of mortgages vary. The typical down payment requirement is 20%, but some loans have down payment requirements as low as 3.5%. Some home loans, like VA and USDA home loans, don’t require a down payment.

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DETERMINE DOWN PAYMENT REQUIREMENTS

Down payments are one of the largest upfront costs when buying a home. To qualify for conventional loans, buyers typically need a 20% deposit. However, you can get a mortgage with just a 3.5% down payment through low-down-payment mortgages. There are also zero-down-payment programs available, like VA and USDA loans.

You generally need to meet certain criteria to qualify for a zero-down-payment mortgage. For example, VA loans are only available to military members, and USDA loans are for people purchasing rural properties.

The amount of your down payment will affect your interest rate and monthly payment. Higher down payments generally mean lower interest rates and monthly payments.

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CALCULATE MORTGAGE INSURANCE

Lenders generally require you to purchase private mortgage insurance (PMMI) if your down payment is less than 20%. FHA and USDA loans also require PMI, but not VA loans. PMI can sometimes be canceled after borrowers make timely payments for a few years.

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DOWN PAYMENT ASSISTANCE PROGRAMS

For some homebuyers, a 20% down payment can be prohibitively expensive. Florida offers several programs to assist with down payments. Here are a few examples:

  • The Florida Assist (FL Assist): The program offers down payment assistance up to $10,000 for conventional, FHA, USDA and VA loans. This loan, however, is not forgivable. There can only be deferrals when the property is transferred, sold or refinanced, the first mortgage is satisfied or when the borrower ceases to occupy the premises, after which the FL loan will become due and payable.
  • The Florida Homeownership Loan Program (FL HLP) Second Mortgage: Through this program, eligible borrowers can apply for funds to pay closing costs, down payments, mortgage insurance premiums or reduce their first mortgage principal. Qualified borrowers can generally benefit from this mortgage program, including:
    — Access to up to $10,000
    — 3% fully amortizing, second mortgage
    — A term of 15 years

You can also explore programs for first-time Florida homebuyers.

Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage is the next step after choosing a lender. Some sellers require a mortgage pre-approval before they show you their properties. Pre-approval requires a hard credit check and is a commitment from the lender to lend you a specific amount.

Pre-approval differs from pre-qualification, which shows you qualify for a loan but is not a commitment from the lender.

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GATHER NECESSARY DOCUMENTS

Mortgage lenders will request personal and financial information to evaluate your debt-to-income ratio and credit history. A mortgage application may also require you to submit additional supporting documentation to prove your eligibility.

Documents you should expect to provide include:

  • Driver’s license
  • Social Security card
  • A copy of your latest pay stub
  • W-2s for the past three years
  • Bank account statements
  • Credit card and debt list

Depending on your situation, you may also need to provide other documents. For example, if you’re self-employed, you’ll need to provide a statement of unpaid accounts receivable and profit and loss statements.

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TIME YOUR PRE-APPROVAL

Pre-approval can take up to 10 days. You can speed up the process by having all the required documents on hand.

You will receive a pre-approval letter from your lender, which typically expires in 30 to 90 days. Try to time your pre-approval to when you are ready to look for and purchase a home. If your pre-approval expires, you’ll need to reapply.

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RECEIVE PRE-APPROVAL LETTER

Your pre-approval letter tells you how much you can borrow from a lender. In addition, it shows you’re serious about home ownership and have the financial resources to take out a mortgage. There is no limit to the number of pre-approval letters you can request. However, lenders will conduct hard credit checks each time, which can affect your credit score.

In a pre-approval letter, you will typically find the following details:

  • Amount of the maximum loan
  • Loan type
  • Loan term
  • Mortgage payment per month
  • Interest rate

Remember that a lender’s pre-approval letter is only valid for 30 to 90 days.

Conduct a Home Inspection

Home inspections are an important part of the purchasing process. A home inspector can provide objective information about the home’s current condition and whether repairs are needed. In most cases, the buyer pays for the home inspection.

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CONTACT A LICENSED INSPECTOR

Make sure your Florida home inspector is licensed, even if the state does not require it. The home inspection typically includes an assessment of the following areas:

  • Basements and foundations
  • Roof
  • Interior and exterior
  • Electrical and power systems
  • Door and window frames
  • The plumbing system
  • Chimneys
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FOLLOW FLORIDA-SPECIFIC INSPECTIONS

To assess potential homes for buyers, home inspectors can use Florida’s State Properties Commission’s facility inspection checklist. You should also consider a separate evaluation to ensure the property is risk-free, even if the seller requests an inspection before mortgage approval.

Depending on your agreement, a professional home inspector may provide expert advice on required repairs and upgrades based on their assessment. Your real estate agent can give you guidance about inspections in your area since inspection guidelines may vary at the county level.

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GO THROUGH APPRAISAL

Before committing to financing a home, mortgage lenders perform appraisals to determine the home’s value. A professional will appraise the property and, in some cases, specify a value that differs from the seller’s expectations.

Lenders also use appraisals to determine whether you have overborrowed since the home may be repossessed if you default on your mortgage. As part of a standard appraisal, market trends for similar properties are considered as well as the structure of the home.

The Florida Real Estate Commission is responsible for reviewing and managing Florida appraisers.

Close Your Mortgage Loan

The lender will send you a mortgage offer once your ideal home is appraised. Make sure you go over the details of the offer. During this stage, mortgage loan applicants must pay application fees and other closing costs.

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SIGN ALL DOCUMENTS

Carefully review all documents before signing them and ask the lender about any unclear terms. The mortgage paperwork will typically include:

  • Mortgage note: Includes detailed information about the loan’s features and repayment guidelines. By signing it, you are legally bound to the loan agreement.
  • Property deed: Includes details about the property and transfers ownership from the seller to the buyer.
  • Final loan application: Borrower signs and returns to the lender after ensuring the information is accurate.
  • Closing disclosure: Spells out the loan terms.
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PAY CLOSING COSTS

Closing expenses may range from 2% to 5% of a home’s total cost depending on the lender, loan terms and location.

The following are common costs across Florida lenders:

  • Title search costs: Verifies the property is in your name.
  • Escrow: An account for paying taxes, homeowners insurance, PMI and annual funding fees.
  • Appraisal costs: The lender conducts a home appraisal, but the buyer pays for the costs.
  • Inspection fees: The buyer also pays for the services of a professional home inspector.
  • Legal fees: You may need to pay an attorney if the property is transferred to your name.
  • Origination fee: Some lenders may charge you an origination fee of a certain percentage of your mortgage, although not all loans are subject to this fee.
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COMPLETE YOUR HOME PURCHASE

Use MoneyGeek’s detailed guide to find the best place to buy a home in Florida and confidently go through the purchase process. To avoid additional charges, ensure you pay your monthly mortgage premiums by the due date once you purchase your home.

Florida Homebuying Details

Florida’s average home price and cost of living are higher than the national average. Therefore, investing in a home that will give you good value for your money is essential.

Buying a home in Florida is possible through both conventional or government-backed mortgages. Various down payment assistance programs are available in Florida, such as The Florida Assist (FL Assist) and The Florida Homeownership Loan Program (FL HLP) Second Mortgage.

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In Florida, the median home price is $406K, although prices can vary depending on where you choose to live. You may save money by shopping around and comparing costs between neighborhoods.

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Make sure you stay within the conforming loan limits in Florida when choosing a mortgage loan. In contrast to conventional loans, FHA loans vary from county to county.

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Consider the cost of living in your ideal neighborhood when calculating the total cost of purchasing your home. Choosing an area close to great amenities can increase the cost of your property, but it may also boost its desirability and quality of your life. For instance, local amenities, such as parks, provide residents with a place to relax, engage in recreational activities, and be social, which promotes a healthier mental and physical state.

Frequently Asked Questions About Buying a Home in Florida

MoneyGeek answers questions about Florida home buying.COLLAPSE ALL

What are the most important questions to ask when buying a house in Florida?

If you’re considering buying a home in Florida, you should ask yourself the following questions:

  • What is the best location for your profile and budget?
  • Does the property’s neighborhood offer a high quality of life, cultural diversity and other important aspects?
  • Is there a property tax on the house? How much?

Is buying a house in Florida a good idea?

No matter where you live, owning a home comes with many financial and personal obligations. Make sure you are financially prepared before making a home purchase.

Is it wise to buy a house in Florida in 2023?

A Florida home is worth more than the average home in the United States. Since costs increased 25% in the past year, you’ll likely make a good investment by purchasing a home now if you have the financial capacity.

How much income do I need to buy a house in Florida?

According to the United States Census Bureau’s 2020 report, Florida has a household income of $61,224. The cost of living in the neighborhood should be lower than your income before you purchase a house in the state.

How much is property tax in Florida?

Property taxes in the state average $1,290 per year, or 0.91% of the value of owner-occupied housing.

Which Florida city is the cheapest to buy a home?

Some of the most affordable neighborhoods in Florida are Jacksonville, Cape Coral, Gainesville, Dade City and Dunedin.

Experts’ Guide on Buying a Home in Florida

Alan Himmel

Alan Himmel

Licensed/Bonded Public Insurance Adjuster and Founder of Florida Allstar Public Adjusting, Inc.BACK TO ALL EXPERTS

What are the key factors to consider when buying a house in Florida?

As an insurance adjuster over the last 16 years and traveling and working practically everywhere in the state of Florida, I have seen that location is a key factor when buying a house. For one, depending on the location you choose, you can expect huge swings in the cost of living. You may be able to find a house in North Florida that is two times larger than a house in the Miami or Fort Lauderdale area for less than half the price. Included with that deal would be lower taxes and much lower property insurance. I have lived in the South Florida area my whole life, and I just cannot believe how expensive it is. In fact, I don’t see how anyone can afford to buy a home if the house is just starting out.

What is the minimum credit score required for purchasing a house in Florida?

Depending on the type of loan you choose when buying a home, the minimum credit score will vary. For example, a regular conventional loan in which the bank is loaning you money and the loan is not backed by the government will generally have a higher credit score requirement. In fact, some banks will ask for FICO scores in the 700s.

However, if your credit score is not so great, like many of us, there may be home-buying programs through the VA or FHA that would allow a credit score in the 500’s. However, although it may seem like it is much more attainable to get a house by getting an FHA or VA loan, keep in mind that there are a few key trade-offs when opting for this deal:

  • You generally won’t be able to borrow as much money.
  • Expect to pay more in PMI insurance and closing costs.
  • You can expect much stricter property condition requirements when looking for an FHA or VA loan.

In this regard, if you are looking for a fixer-upper, you may not be able to do it so easily with a government-backed loan.

What common mistakes do home buyers make when trying to purchase a property in Florida, and how can they avoid these pitfalls?

No matter where you are in the country, I always tell people a couple of things when they are considering buying a property: I advise people never to skip the pre-purchase inspection and always ask for a CLUE report. Getting a pre-purchase inspection is a no-brainer. You will need a professional to look at your whole house, from the roof to the HVAC, the plumbing, and the electrical parts of the house. This information is invaluable if the inspection reveals problems because, with this information, you can decide to try and negotiate a discount on the deal or to walk away from the deal altogether.

A CLUE report is not so obvious but could offer very useful information to the prospective buyer about previous insurance claims. Unlike a driver record, which stays with the driver, a CLUE report stays with the property, and the new owner, which could be you, will inherit a bad history. What this means is that it could potentially make it difficult to acquire insurance on the property.

An insurance company’s underwriting department has to decide on your insurance rate or whether they will insure you at all, and some of these decisions are made when they look at your home’s CLUE report. If a property has had multiple plumbing leak claims, you could reasonably assume that you may have more plumbing problems in the future. The insurance company that is about to write you a new policy will make this assumption and either not sell you a policy or make your premium very high.

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