How to Buy a House in Florida in 2023

Whether you’re looking for a house to retire in, a vacation home, or your first residence, buying a house in Florida can be exciting and intimidating. It’s a fast, hot market—especially in South Florida; it’s constantly accelerating.

Still, the core process of buying a house in Florida is no different from any other state. You must prepare your finances, find the right home, and make an offer.

Read on to discover the complete process of purchasing a house in Florida.

Is It Hard to Buy a House in Florida in 2023?

In short, yes. Florida housing is in a seller’s market right now. There is more demand for houses than there is supply. This puts upward pressure on prices and makes it difficult for buyers to find a Florida home that meets their budget and needs.

The median sales price of a home in Florida has increased dramatically since early 2020. But that doesn’t mean getting a home in Florida is impossible. Around 20% of the home purchases in Florida are still first-time homebuyers.

How to Buy a House in Florida: Step-by-Step

In Florida, your special considerations relate to the hot market and the highly varied housing stock. Because the market is aggressive, you’ll need to make a great offer. Because there are so many locations in Florida to purchase and invest in, you’ll need the help of a real estate expert.

1. Pre-Check Your Credit Report

The first thing you should do when preparing to buy a house is to check your credit report and score. If you haven’t been building your credit, you should start now. Get a credit card and pay the balance in full monthly to start building your credit.

You will need a credit score of at least 580 to get an FHA loan, but realistically most lenders will require 620 or above for a loan. If you have a down payment of 10% or more, you may go as low as 500. Your credit score doesn’t just control whether you can qualify; it also controls the rate you can get.

A FICO By Any Other Name…

You pull your FICO score, and it’s 680. But when you go to a lender, they deny you because your score isn’t high enough.

What gives?

Mortgage companies actually use an older model of FICO score. Today, most creditors use FICO 8. FICO 9 is out, but it’s youthful enough that most people aren’t using it.

Mortgage servicers, on the other hand, use something called FICO 2, FICO 4, or FICO 5. This is the same algorithm but pulled from different companies. It’s old. Your FICO 2/4/5 score is almost always much lower than your FICO 8/9 score.

2. Save Up for a Down Payment

The next step is to save up for a down payment. You will need 3.5% of the purchase price for an FHA loan or 10% – 20% for a conventional mortgage. If you are a veteran, you may be eligible for a VA loan which requires no money down.

If you are looking in a rural area in Florida (you would need to check with the housing administration to determine if it’s truly rural), you may be able to get a USDA loan, which also requires no money down. Many areas in Central Florida could count as rural; you can’t know until you check.

And it’s not just the down payment. You must also pay closing costs, such as appraisals, home inspections, and loan origination fees. While some can be rolled into the loan, others cannot.

There are down payment assistance programs, but they can be difficult to qualify for. You’re always better off saving 3.5% down and getting an FHA mortgage rather than struggling to save 10% or 20% of the home value.

3. Get Your Prequalification or Preapproval Letter

The next step is to get prequalified or preapproved for a loan. A preapproval or prequalification letter will tell you how much you can borrow, but they aren’t interchangeable.

To get prequalified, you simply contact a lender and provide basic information about your finances. Ideally, you’ve already fixed anything derogatory on your credit.

You must fill out a mortgage application and provide the documentation to get preapproved. Preapproval requires tax returns, pay stubs, asset statements, and more. The lender will pull hard on your credit and verify your information.

Prequalification is a good first step when looking for a property. Preapproval is a more in-depth process, but it gives you a firmer loan commitment from the lender. Either way, you need to know how much you can qualify for before moving forward. Even a prequalification will usually be accurate if you have provided accurate information.

Note that some lenders switch around the meanings of prequalification and preapproval or may define them independently. Some lenders also offer things called guaranteed preapprovals, which are pre-underwritten. Be cautious and make sure you know what you’re getting.

4. Consult with a Real Estate Agent

Consult with a real estate agent when you’re ready to start looking for a property. Tell them what you want and what your budget is. They will give more insights into the local market. Realistically, purchasing a house in Jacksonville will differ from purchasing one in Fisher Island.

There are a lot of real estate agents out there. But you need one that can help you with your unique needs. Ask them how much experience they have, what they know about the local market, and how they’d advise you to approach the current market. Ask them their strategies for dealing with the current market—and how many deals they’ve been closing.

5. Look for Houses in Your Range

Once you have a preapproval letter and a real estate agent, you can look at houses in your price range. With the market moving so fast, it’s challenging to determine what’s a good deal or not. Again, work with your real estate agent to find the right house.

In Florida, real estate is hyper-local. Depending on what you want, there are still some very affordable and some very not-so-affordable locations.

It’s better to look a little below your range if offering over asking is common. If you just can’t find anything within your range, you may need to change the location you’re looking at or your criteria.

6. Make an Offer on Your House

Once you’ve found the perfect house, it’s time to make an offer. Your real estate agent will help you with the negotiation process, but ultimately it’s up to you to decide how much you’re willing to pay for the house.

In some markets, you might as well start low—especially if the house has been on the market for a while. In other markets, the listings start out low, and you must offer the above asking. Navigating this part of the real estate transaction is part of what your real estate agent is for.

Frequently, people are now waiving contingencies as a part of their offer. For instance, they might waive their home inspection contingency. They can still get a home inspection but can’t back out of the deal because the inspection went poorly (at least, not without losing their earnest money).

You can also waive the appraisal contingency. If the house appraises below your offer, you may be responsible for the difference (a bank will only lend based on the appraised value).

Waiving these contingencies is very dangerous, as you could end up on the hook for a property with major problems. But because it’s such a competitive market, your real estate agent may advise you that waiving contingencies will be necessary to accept an offer.

Finally, there will be an expiration date on your offer. You will usually know whether the offer has been accepted within one or two days. Today, you can expect to put in a couple of offers before you land a house. And the process certainly isn’t complete once your offer has been accepted.

7. Close on Your House

There are a lot of stages to closing a home, but most of them aren’t under your control. During this time, you’ll largely be responding to inquiries and sending in the documents you are asked to send in.

  • First, you will open escrow with your earnest money. The escrow system ensures that your money goes to the seller and that the seller, in turn, transfers their property to you.
  • Your loan will be sent to underwriting, where they will verify all of your information. They will likely ask you for information multiple times; make sure to get it to them within 24 hours.
  • You will have the home inspection ordered, which will find anything (visible) that needs to be repaired in the home. If you’ve waived the inspection contingency, you will not be able to ask the sellers to repair these-but, at least you’ll know.
  • You’ll have a home appraisal to ensure the property is worth your pay. If the house is appraised under your offered value, you may need to close the gap yourself.
  • Your loan will be approved (hopefully). You should receive a “clear to close” within a few days of your closing.
  • You will review the final walkthrough on the signing day to ensure everything is in order.
  • You’ll schedule a closing time and sign all the paperwork.

Until you close, you’re not “safe”; the deal could fall through at any time. You might not get financing, or the seller could just back out (although not without penalty).

Avoid opening any new credit or changing your credit while you’re closing. This could jeopardize your loan.

Once you’ve actually got your keys in hand, you’re safe. The home is yours. It may seem like an extraordinarily lengthy process. But once you get started, you’ll probably find it faster than you think.

Tips for Buying a House in Florida

  1. Get a preapproval letter before you start looking for a house. This will help you determine your price range.
  2. Work with a real estate agent who knows the local market.
  3. Don’t be afraid to make low offers, especially if the house has been on the market for a while.
  4. Expect to put in a couple of offers before you land a house.
  5. Stop worrying once you’ve reached escrow. All you can do is wait (and avoid damaging your credit).
  6. Purchase the title insurance. Title insurance will protect you in the event that there’s an issue with your home’s title that encumbers it.

Conclusion: How to Buy a House in Florida

The Florida real estate market is unique. There are a number of things that you need to consider when you are looking to purchase a home in the state, including everything from the type of home you want to buy to the location you want to live in. Your best resource will be a local real estate agent.

But before you start looking, it’s time to get your ducks in a row:

  • Check your credit report and credit score
  • Start saving for a down payment
  • Get an estimate for what you can afford.

FAQs

How much money do you need to buy a house in Florida?

The minimum amount you’ll need for a down payment is 3.5% of the home’s purchase price. So, on a $200,000 home, you would need at least $7,000 to put down. But there are some exceptions. USDA and VA loans are neither down payment loans, but they can be difficult to qualify for.

What qualifications do you need to buy a house in Florida?

It really depends on your loan product rather than your location. If you want an FHA loan, you should have a credit score of at least 580, a steady income, and solid employment history. For a conventional loan, expect you to need a credit score of at least 620.

What credit score is needed to buy a house in Florida?

The credit score you need to buy a house in Florida depends on the type of loan that you are applying for. For an FHA loan, the minimum credit score is 580. But for a conventional loan, you will need a credit score of at least 620. The more down payment you have, the more likely you will get away with a lower score.

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