How to Buy a House in Florida: 6 Steps

Purchasing a house is a major financial decision that requires careful consideration. In Florida, the average home value is $399,130, which is higher than the national average of $362,481. This comparison highlights the financial commitment required for homeownership in the state.

Understanding down payment assistance programs, mortgage types and state-specific regulations can ensure a smooth journey toward homeownership in the Sunshine State. MoneyGeek compiled the essential pointers to help you navigate the homebuying process in Florida, from saving the down payment and choosing the ideal location to finding the best financing option for your particular needs and credit history.

In the second quarter of 2024, Florida's homeowner vacancy rate was 1.2%, according to the U.S. Census Bureau. The homeowner vacancy rate measures the percentage of homes that are vacant and available for sale.

With a homeowner vacancy rate of 1.2%, Florida is experiencing high housing demand for limited inventory. A stable rate is typically around 2%, which allows for more flexibility and choice for homebuyers. When the rate is between 1.0% and 1.9%, it indicates a competitive market. This means that homebuyers in Florida might face challenges in finding available properties, potentially leading to higher prices and quicker sales.

Before purchasing a home in Florida, it's essential to review your financial and credit history. A strong financial profile enhances your chances of getting approved when applying for a mortgage.

Your credit score plays a pivotal role in determining the mortgage loans and interest rates you qualify for. A higher score increases the likelihood of securing a reasonable rate. In Florida, the average credit score as of the third quarter of 2023 was 708, according to Experian.

If you have a poor credit score, ranging from 300 to 579 on the FICO scale, buying a house is still possible, though obtaining mortgage approval may be challenging. Review the table below to identify which mortgage type suits you based on the minimum credit score requirements.

Source: Experian

Your debt-to-income ratio (DTI) is a key metric that lenders use to determine how much of your monthly income is dedicated to debt payments. This helps them evaluate how much mortgage debt you can responsibly manage. In Florida, the average mortgage debt stood at $240,113 in the third quarter of 2023, according to Experian. This figure highlights the financial commitment involved in taking on a mortgage, emphasizing the importance of understanding your DTI.

Monthly debt payments factored into your DTI include housing expenses, credit card payments, student loans and other obligations. Use our debt-to-income ratio calculator below to see your front-end DTI, back-end DTI and total monthly debt payments. Front-end DTI represents the portion of your income that goes towards housing costs, while back-end DTI includes all your debts.

Purchasing a home is a significant financial commitment, and it's crucial to avoid the mistake of buying a house you can't afford. The 28% rule serves as a helpful guideline, suggesting that you should not spend more than 28% of your monthly income on your mortgage payment. This approach helps ensure that your housing costs remain manageable, allowing you to maintain financial stability and avoid unnecessary stress.

According to the U.S. Bureau of Labor Statistics, the median annual income in Florida as of April 2024 was $45,070. This equates to a gross monthly income of $3,756 before taxes. Applying the 28% rule, you would aim to keep your monthly mortgage payment at or below $1,052. This calculation provides a clear framework to help you assess whether a prospective home fits within your financial means.

Use our mortgage calculator below to get a ballpark figure of your monthly mortgage payment in Florida.

A down payment is an upfront payment made when purchasing a house, often set at 20% of the home's purchase price. This standard can pose a significant hurdle for many homebuyers. For example, the average home value in Florida is $399,130, which means a 20% down payment would be $79,826. For homes above the average value, such as $480,000, the down payment increases to $96,000. These figures illustrate the financial challenge of meeting the traditional down payment requirement.

Fortunately, saving up for a 20% down payment is not a requirement for all homebuyers. Many mortgage types allow for lower down payments. For instance, government-backed loans like VA loans require no down payment, while FHA loans require only a 3.5% down payment. These options can make homeownership more accessible.

If you choose to put down less than 20%, your lender may require you to take out private mortgage insurance. This insurance protects the lender in case of default and adds to your monthly expenses. You can use our PMI calculator to estimate your monthly private mortgage insurance premium based on your credit score and down payment.

Florida offers several down payment assistance programs that help make homeownership possible for many people. These programs can significantly reduce the financial burden of purchasing a home by providing funds to cover part or all of the down payment. One such program is offered by the Florida Housing Finance Corporation.
Check out the table below for the available down payment assistance programs in Florida.

Finding the right location in Florida requires careful consideration of several factors. Start by evaluating the average house prices in areas you're interested in. Proximity to family, friends, work, or school is also crucial. Additionally, consider access to public transportation, parks, restaurants and shopping centers to ensure a convenient lifestyle.

The cost of living is another factor that influences your choice of a new home. According to the Missouri Economic Research and Information Center (MERIC), Florida's cost of living index for the first quarter of 2024 was 103.1, slightly above the national average of 100. This means living in Florida may be more expensive than in some other states. Consider these expenses when choosing the right location:

• Food
• Healthcare
• Clothing
• Utilities
• Education
• Transportation
• Entertainment

Check out the table below to see some cities in Florida and their average home values based on recent data. You can also use our cost of living calculator to help you estimate how much you'll need to pay for all the essentials in different locations.

Source: Zillow

Working with a real estate agent can significantly speed up your house hunt in Florida. Agents provide the advice you need and handle the paperwork, making the process smoother. They also offer an expanded list of property options that you might not find on your own. Additionally, agents can recommend service providers like title companies and inspectors to assist with your home purchase.

When finding a real estate agent, ensure you do your due diligence and interview those with experience in your desired neighborhoods. Consider the following tips:

• Find someone compatible with your needs and personality
• Verify the agent's credentials, training and licensure
• Ensure they have in-depth knowledge of the area
• Shop around for agents and compare their rates

You can also use the license holder search tool from the Florida Department of Business and Professional Regulation to find or verify real estate agents in Florida.

Navigating the homebuying process in Florida involves finding the best mortgage you can afford. Options include conventional loans, jumbo loans, FHA loans, VA loans and USDA loans. You can choose from various terms, such as 10-year, 15-year, 20-year or 30-year. Consider whether a fixed-rate mortgage or an adjustable-rate mortgage (ARM) suits your needs. Selecting the right financing option can improve your chances of approval and save you money over time.

Interest rates on a mortgage can change daily due to various factors, including the type of mortgage, the lender and the economy. While the interest rate is the cost you pay each year to borrow money, expressed as a percentage, the annual percentage rate (APR) includes additional costs associated with the loan, such as fees and other charges, offering a more comprehensive view of the true cost of borrowing.

As of October 2024, the APR for a 30-year fixed conforming loan in Florida is 5.95%, while the APR for a 30-year fixed rate FHA loan is 6.40%. Check the table below to see the current mortgage rates in Florida by mortgage type.

Getting pre-approved for a mortgage in Florida can streamline your home buying process. A mortgage pre-approval involves a lender assessing your financial situation to determine how much they can lend you. This step provides a clearer picture of your budget and signals to sellers that you are a serious buyer. Lenders typically issue a pre-approval letter, which shows your borrowing capacity and is usually valid for 60 to 90 days.

To obtain a mortgage pre-approval, you need to submit several documents. These include:

• Proof of income
• Credit history
• Employment verification
• Identification

Home inspections play a pivotal role in the homebuying process in Florida. They offer prospective buyers a comprehensive assessment of a property's condition, which can prevent unexpected repair costs and ensure a sound investment. Inspectors typically examine structural components, roofing, plumbing, electrical systems and heating and cooling systems. The inspection report usually includes detailed findings on these areas, highlighting any necessary repairs or potential issues.

For instance, consider a scenario where an inspection uncovers major issues such as a damaged roof or faulty electrical wiring. Such findings can significantly affect the property's appraisal, potentially lowering its market value. In response, buyers might decide to negotiate for repairs or a price reduction. Alternatively, they may choose to rescind their offer if the issues are too extensive or costly to address. This illustrates how inspection results can directly impact the homebuying decision and financial considerations.

In Florida, home inspections are regulated by the Department of Business and Professional Regulation (DBPR). Licensed home inspectors are required to adhere to specific standards of practice, ensuring that inspections are consistent and thorough. These standards focus on key aspects of a property's condition, providing homebuyers with reliable information.

When searching for a home inspector in Florida, make sure they are licensed. Check what other clients have said by looking at online reviews and asking for references. You can also use the DBPR's license search tool to find or verify licensed home inspectors. This approach helps ensure you hire a qualified professional who meets the state's regulatory standards.

In the Florida homebuying process, home appraisals play a crucial role in determining a property's fair market value. This assessment ensures that both buyers and lenders have an accurate understanding of the property's worth before proceeding with a transaction. According to the 2023 Appraisal Survey from the National Association of Realtors (NAR), the median appraisal cost in 2023 was $500.

While both inspections and appraisals are integral to the homebuying process, they serve different purposes. A home appraisal focuses on assessing the property's value, while a home inspection evaluates its condition. Lenders require appraisals to confirm that the loan amount aligns with the property's market value, thereby protecting their investment.

Closing is the final step in buying a house in Florida, marking the transfer of ownership and the moment you receive the keys. Your lender must provide a closing disclosure document three days before the official closing. This document outlines loan terms, projected monthly payments and closing costs. Plan a final walk-through with your real estate agent near closing day to ensure the property is in the expected condition.

During closing day, you'll review and complete a lot of paperwork. Understanding each document you sign is essential. Here are some of the key documents you will encounter:

• Final loan application: This document verifies the loan terms you agreed upon with your lender. It ensures that all details are accurate and reflects the final agreement.
• Deed transfer: This legal document transfers the ownership of the property from the seller to you. It is recorded with the local government to officially recognize you as the property owner.
• Promissory mortgage note: This is a written promise to repay the mortgage loan under specified terms. It outlines the repayment schedule, interest rate and consequences of default.
• homeowners insurance in Florida: This insurance protects your new home against risks such as fire, theft and natural disasters. In Florida, it is particularly important due to the state's susceptibility to hurricanes and floods.

Closing costs are the fees and expenses you must pay when finalizing a mortgage. For more detailed information, see closing costs. In Florida, these costs average around $3,821, according to NAR. Here are some of the fees you may encounter:

• Appraisal fee: This covers the cost of evaluating the property's value.
• Title search and insurance fee: This ensures the title is clear of any liens and protects against future claims.
• Escrow deposit: This is a reserve for property taxes and insurance.
• Prepaid costs: These include advance payments for items like homeowner's insurance and property taxes.
• Other closing costs: This category can include various fees such as credit report fees and recording fees.

If you are a first-time homebuyer, learning the different first-time homebuyer programs in Florida can also help you achieve homeownership faster.

Buying a house in Florida is a major financial commitment that could span years. We answered some frequently asked questions about buying a house in Florida to kickstart your homebuyer journey.