2018 Was a Successful Year for Florida First-Time Homebuyers

If you were buying your first home in 2018, you had a lot of company. Despite a slowdown late in the year and some other challenges, there were plenty of first-time buyers in Florida and across the entire nation. In fact, 2018 was the strongest year for sales to first-time homebuyers in 12 years.

First-time Homebuyers: The Statistics

According to the Genworth Mortgage Insurance First-Time Homebuyer Market Report, last year there were 2.07 million first-time homebuyers purchasing single-family homes. This is a 1% increase over 2017 and makes 2018 the strongest year since 2006.

To put it another way, 39% of all sales of single-family homes were sales to first-time homebuyers. In 2014, only 31% were. First-time buyers took out 56% of new purchase loans in 2018 as compared to 52% in 2014. There were more first-time homebuyers among the total number of homebuyers than in any year since 2000.

For those needing a first-time buyer mortgage, low down payment mortgages were a popular choice. 1.67 million first-time homebuyers (80%) opted for them.

Conventional mortgages with private mortgage insurance were also a popular option. 682,000 first-time homebuyers chose them, while only 629,000 first-time buyers obtained a first-time buyer mortgage through the FHA.

That’s because mortgages with low down payments, especially conventional loans with private mortgage insurance, provide crucial support for first-time homebuyers. This is particularly true in a market where affordability is declining.

First-time Homebuyers, Declining Affordability, and the Demand for Lower Priced Homes

The research indicates that housing affordability declined by 17% in the fourth quarter of 2018 as compared to a year before. Higher home values and rising interest rates were to blame.

Despite the fact that sales to first-time homebuyers were relatively strong throughout 2018, the decline in housing affordability did produce a slowdown. There were only 480,000 first-time buyers in the fourth quarter of 2018, which represents a 3% drop versus the fourth quarter of 2017. (The decline for repeat buyers was more than 7%.)

Dismayed by the decline in housing affordability, some potential first-time homebuyers (and potential repeat homebuyers as well) put off looking for and buying an affordable new home. The numbers went down nationally and in 35 particular states.

This wasn’t bad news for everyone because decreased demand produced a dip in prices in the fourth quarter. Among those who did go house hunting, 70% of first-time homebuyers (and 80% of homebuyers overall) paid lower prices compared to people who bought in the fourth quarter of 2017. The median price paid by first-time homebuyers dropped to $233,600, which represents a year-by-year decline of 2%.

First-time Homebuyers and the Prospects for 2019

It’s possible that first-time homebuyers’ caution and wish to avoid overpaying may prolong the slowdown. The reality, however, is that housing affordability is showing improvement, and recognition of this fact may improve consumer confidence in the market and produce improvement in the spring.

Which is all well and good. But it may not provide all the help you need to make you a Florida first-time homebuyer.

Assistance for Florida First-Time Homebuyers

In Florida, the Florida Housing Finance Corporation, often referred to simply as Florida Housing, offers down payment and closing cost assistance programs to put buying your first home within your reach.

The programs are designed to benefit several groups. First-time homebuyers qualify. So does anybody who hasn’t owned or occupied a home in three years, active service members, qualified veterans, and, depending on the specific circumstances, possibly someone buying in a federally designated “targeted area.” These are streets, blocks, or neighborhoods where, according to HUD, 70% of households earn 80% or less of the statewide median income.

Florida Housing’s Home Loan Programs for First-time Florida Homebuyers

All the programs are 30-year fixed-rate mortgages available to first-time buyers, active military personnel, and qualified veterans who meet income, purchase price, and credit requirements and complete a homebuyer education class. There’s a tax credit available for mortgage interest payments, and the home loan program can combine with a closing cost or down payment assistance program.

The property being purchased must be a primary residence inside the state of Florida.

Florida First and Military Heroes Loan programs serve qualified active military servicemen and vets with VA, FHA, and/or USDA loans. Military Heroes offers lower rates, and you need not be a first-time homebuyer to take advantage of either program.
FL FHA Preferred & Preferred PLUS Conventional Loan programs offer lower insurance costs than comparable FHA loans. Two Preferred Plus choices offer 3% or 4% grants to pay for closing costs and down payments, and there’s no need to repay the grants. Those who take advantage of the 4% grant, however, should be aware that it comes with a significantly higher interest rate than the standard Preferred and 3% Preferred Plus options.

Florida Housing’s Down Payment and Closing Costs Assistance Programs for Florida First-time Homebuyers

Florida Assist Second Mortgage Program (AKA Florida Assist) offers up to $7500 at no interest on a deferred second mortgage to serve as a down payment. You don’t have to repay the money until the home is sold, ownership is transferred, or the loan is refinanced or paid off.
3% FHA Preferred Grant provides 3% of the purchase price of the home to cover down payment and closing costs, and you don’t have to pay it back.
Florida Housing’s Mortgage Credit Certificate (MCC) allows qualified Florida first-time homebuyers to claim 50% of their mortgage interest (capped at $2000) as a tax credit every year they reside in the house. An MCC can only be used in conjunction with a Florida Housing loan program.

You can visit Florida Housing’s website for additional information on these programs. It’s useful to bear in mind that Florida Housing is not itself a lender and can’t make decisions about mortgages. To apply for a mortgage, you’ll want to consult one of its approved lenders who may then apply their own standards regarding income and credit to decide if you qualify for one of their loans.