First-Time Home Buyer Guide for Florida: Documentation, Credit, and Loan Officer Selection

Buying your first home in Florida is a significant financial decision. Understanding documentation requirements, credit expectations, down payment options, and how loan officers evaluate your application helps you approach the process with confidence and avoid surprises.

Understanding Down Payment Requirements for First-Time Buyers

Minimum Down Payments by Program:

Conventional Loans:

• 3% down (with mortgage insurance)
• 5% down (less mortgage insurance)
• 10-20% down (minimal or no mortgage insurance)

FHA Loans (Popular for First-Time Buyers):

• 3.5% down (if credit score 580+)
• 10% down (if credit score below 580)

VA Loans (Military Members):

• 0% down (no down payment required)
• 2.3% VA funding fee (typically rolled into loan)

USDA Loans (Certain Rural Areas):

• 0% down (income limits apply)

Down Payment Sources

Acceptable Down Payment Sources:

• Personal savings (most common)
• Gifts from family members (requires gift letter)
• Down payment assistance programs (Florida has several)
• Employer relocation assistance
• Non-taxable retirement account withdrawals (in some cases)

Not Acceptable:

• Borrowed funds or personal loans
• Credit card cash advances
• Unsecured loans

Documentation First-Time Buyers Must Provide

Income Documentation:

• W-2 statements (past 2 years)
• Recent pay stubs (last 30 days)
• Tax returns with all schedules (past 2 years)
• Written employment verification from employer
• Explanation letter if you changed jobs within past 2 years

Asset Documentation:

• Bank statements (last 2-3 months) for down payment source
• Investment account statements
• Retirement account statements (401k, IRA)
• Gift letter if down payment includes family gift
• Proof of source of large deposits

Credit and Debt Information:

• Authorization for credit report pull
• Explanation letters for any negative marks (late payments, collections)
• Documentation of paid collections or disputed items
• List of all current debts and monthly obligations

Property and Purchase Information:

• Signed purchase agreement
• Real estate agent contact information
• Identification (driver’s license or passport)
• Property address and description

Credit Score Requirements for First-Time Buyers

Conventional Loans:

• Minimum 620 middle credit score (some programs require 640)
• Better rates typically start at 680+

FHA Loans:

• Minimum 580 middle credit score (3.5% down)
• Minimum 640 middle credit score recommended (10% down, but wider rate options)

VA Loans:

• No official minimum (lenders set their own, typically 620+)
• Often more lenient on credit issues if compensating factors exist

What “Middle Credit Score” Means: Your lender uses the median score from three bureaus (Equifax, Experian, TransUnion), not the highest or lowest. Understanding your middle score before applying lets you know what rates you’ll likely qualify for.

Debt-to-Income Ratio Limits

Lenders verify that your new mortgage payment doesn’t exceed 43-50% of your gross monthly income.

Calculation: (All monthly debts ÷ Gross monthly income) × 100 = DTI

Example:

• Gross monthly income: $6,000
• Estimated mortgage payment: $1,500
• Auto loan: $300
• Student loans: $250
• Credit cards: $200
• Total debts: $2,250
• DTI: 37.5% ($2,250 ÷ $6,000)

High student loan balances or credit card debt can limit your borrowing power even with good credit and income.

Mortgage Insurance for First-Time Buyers

Private Mortgage Insurance (PMI) - Conventional Loans:

• Required if down payment is less than 20%
• Typical cost: 0.5-1% of loan amount annually
• Can be removed once you reach 20% equity

FHA Mortgage Insurance:

• Upfront insurance: 1.75% of loan amount (rolled into loan)
• Annual insurance: 0.5-0.8% depending on down payment percentage
• Cannot be removed (permanent for loans with 10% down or less)

VA Funding Fee (VA Loans):

• One-time charge: 1.4-2.3% of loan amount
• Varies based on down payment percentage
• Waived for 0% disability rating

Closing Costs You’ll Pay

Typical Closing Costs (2-5% of loan amount):

• Loan origination fee: 0.5-1%
• Appraisal: $300-600
• Title search and insurance: $200-600
• Attorney fees (FL requires): $300-600
• Homeowners insurance: depends on property
• Property taxes: depends on county
• Recording fees: $50-200

How to Choose a Florida Loan Officer

Look For:

1. Education-first approach - They explain terms, not just rates
2. Transparency - They provide loan estimates early and explain costs
3. State licensing - Verify they’re licensed in Florida
4. Responsiveness - They answer questions at your pace
5. No pressure - They never rush applications or rates

Avoid:

• Loan officers who push fast closings
• Those who avoid explaining fees and costs
• Anyone quoting rates without qualification questions
• Pressure to apply before you’re ready

Getting Ready to Meet a Loan Officer

Gather Documents:

• Government-issued ID
• Recent pay stubs and tax returns
• Bank and investment statements
• List of monthly debts and accounts

Prepare Questions:

• What’s my maximum home price in my price range?
• How much will down payment and closing costs be?
• What documentation will you need from me?
• What are typical timelines from application to closing?
• How will you explain rate options and loan programs?

Next Steps for First-Time Buyers

Browse Florida loan officers who prioritize education and transparent guidance. Many offer first-time buyer resources and can walk you through each step at your pace, without pressure.

Your first mortgage is foundational to your financial future—take time to find a loan officer who treats it that way.