How much you need for a down payment
Twenty percent down isn’t required. The most common options for first-time buyers:
- Conventional loans: some programs let first-time buyers put as little as 3% down. With less than 20% down you pay private mortgage insurance (PMI) until you have enough equity to remove it.
- FHA loans: 3.5% down with a credit score of 580 or higher. FHA is more flexible on credit and debt, but its mortgage insurance usually lasts the life of the loan unless you later refinance.
- VA loans: eligible veterans and service members can buy with no down payment and no monthly mortgage insurance.
The right choice depends on your credit, savings and how long you plan to stay. A smaller down payment keeps cash in the bank but raises the monthly payment.
Florida down payment assistance
Florida Housing Finance Corporation runs statewide programs for first-time buyers, including down payment and closing cost assistance paired with a first mortgage and, when funded, the Florida Hometown Heroes program for full-time Florida workers. Palm Beach County, Broward County and some cities offer their own programs too.
These programs have income limits, purchase price limits and a homebuyer education requirement, and funding comes in rounds. Ask early, because availability changes through the year.
Costs beyond the down payment
- Closing costs: typically 2% to 5% of the purchase price, including lender fees, title insurance, and Florida’s documentary stamp and intangible taxes on your mortgage.
- Homeowners insurance: South Florida premiums are among the highest in the country. Older homes may need a 4-point inspection to be insurable, and a wind mitigation inspection can lower your premium if the home has impact windows, shutters or a newer roof.
- Flood insurance: required if the home is in a special flood hazard area, and worth pricing even if it isn’t.
- HOA or condo dues: common in South Florida, and lenders count them in your monthly debts.
- Reserves: savings left over after closing make approval easier and protect you from surprises.
The mortgage calculator includes taxes, insurance and HOA dues so you can see the full monthly cost.
Condo or house?
Condos are often the most affordable way into Boca Raton, but the lender reviews the building as well as you. Buildings with low reserves, pending special assessments or unfinished structural repairs can be ineligible for conventional or FHA financing. Read the South Florida condo financing guide before you fall for a unit.
The homestead exemption
Once you own and live in the home as your permanent residence, file for Florida’s homestead exemption with the county property appraiser by March 1 of the year after you buy. The exemption takes up to $50,000 off your home’s assessed value, and the Save Our Homes cap then limits how much the assessed value can rise each year to 3% or the rate of inflation, whichever is lower.
Budget for taxes based on your purchase price, not the seller’s current bill. When a home sells, its assessed value resets to market value, so the seller’s tax bill, often lowered by years of their own homestead cap, usually isn’t what you’ll pay.
From pre-approval to closing
- 1Get pre-approved. A lender reviews your credit, income and assets and tells you how much you can borrow. Sellers take pre-approved offers more seriously.
- 2Shop with a real budget that includes taxes, insurance and HOA dues, not just the loan payment.
- 3Make an offer and schedule inspections, including the insurance inspections older homes may need.
- 4Lock your rate and complete underwriting. Avoid opening new credit or making large unexplained deposits until closing.
- 5Close. In Florida, closings are handled by a title company or real estate attorney.
