Understand the S.H.I.P. Loan Program for First Time Home Buyers
Florida First Time Buyers - Other states please check with your HUD
agency in your area.

While the economy has been tough for the housing market, new
homeowners may have had the toughest time. In most parts of the
country, the housing supply and reduced prices made purchasing a new
home now a good idea. Unfortunately, many lenders also started
cracking down on their lending practices. They required higher income
levels, increased the interest rates, and started asking for larger down
payments. People from lower income backgrounds found it increasingly
challenge. In Florida, however, a no money down payment loan for first
time home buyers is making things easier.

Background on the Program

This no money down payment loan for first time home buyers is available
through a program known as S.H.I.P which stands for State Housing
Initiative Partnership. The program is available in every county in Florida.
Each county receives state funds which they, in turn, use to promote
home ownership in their area, particularly among those with the lowest
income and the greatest need for financial assistance. However, these
government assisted home loans are not just given to everyone.
Individuals do need to meet specific requirements.

The Down Payment Assistance Program

Buyers must meet certain qualifications if they are going to receive the
no money down payment loan for First time home buyers. Because the
program is for low income families, the household income must not equal
more than 120% of the AMI (Area Median Income). Because the AMI
varies greatly between Florida counties, this is the most effective way of
setting income limits for the program. To prevent buyers from moving into
counties where they will be eligible, a one year residency requirement in
that county is required as well.

Additionally, buyers are asked to secure the mortgage financing and to
complete an education seminar provided free through the S.H.I.P program
that educates them on the facts about purchasing a home for the first
time. Individuals must also contribute either 1% of the total home�s sale
price of $1,000 to the purchase as a sign of commitment to honor this
partnership.

The buyer isn't the only one who must meet specific qualification
requirements to receive government assisted home loans. The property
must also qualify. Obviously, it must be located in the same county.
However, the sale price cannot be higher than $219,000 to qualify. That
makes sense because the maximum assistance provided is $35,000. The
total amount homeowners will be eligible for depends on their household
income. Another requirement is that the combination of the two loans
must not be more than 105% of the homes appraised value  this rule is
to protect the home buyer from paying too much for a property.

Reasons for Refusal

Following May 2008, a few additional requirements were added to the
program to ensure the funds were being used to assist the most eligible
individuals. The credit score requirement of 620 was added. However,
individuals with lower credit scores can be eligible if they do not have
any garnishments, past due revolving accounts, a bankruptcy in the last
two years, or past due rent within the last 12 months. Applicants with
credit scores below 620 are approved at the discretion of the program,
and those are just some of the examples which could disqualify a
prospective home buyer.

The Benefits of the Program

The no money down payment loan for first time home buyers is made to
the owners at the time of their closing on the property. While called a
loan, it doesn't work as a loan. Instead, they carry a 0% interest rate so
the amount needed for the down payment and borrowed will not
increase. Additionally, the loan will be completely forgiven if the
homeowners are still in it fifteen years later.

Obviously, this has a tremendous positive impact on low-income families
who want to purchase their first home but who may find saving up a
10% or down payment to be nearly impossible. After all, a 10% down
payment for a $100,000 home would be $10,000 which is a lot of money
for anyone to save up.

By forgiving the loan after fifteen years, the program uses these
government assisted home loans to encourage people to buy a home,
take care of the home, and live in it. After all, purchasing a home is
usually a solid investment, even despite the recent slump in the market.

For potential home owners who meet the programs requirements, it can
provide a wonderful opportunity they may not have otherwise had.  This
is an awesome program if you can qualify.

Click here for to visit the Florida Housing Coalition for any question you
may have.