Many homebuyers have little idea of how to afford the down payment on the home they want. Even a small 3.5% down payment as required by an FHA Loan will be thousands of dollars.
Fortunately, there are programs available to help this. As a realtor, you’re in a great position to inform homebuyers about how they can afford the home they want. In the process, lenders will qualify your clients for more, and you’ll get under contract more often. Today we’re going to cover what you need to know about Florida’s State Housing Initiative Partnership Program, or SHIP.
SHIP provides down payment and closing cost assistance to low or moderate income homeowners. SHIP differs from the Florida First Time Homebuyer Program in that it is not directly run by Florida Housing. Instead, local governments are granted funds, with some stipulations on how they may be used.
Because of this, different local governments have their own individual SHIP policies, but the requirements of Florida Housing for the funds to be distributed to low-to-moderate income homebuyers ensure some common standards.
SHIP funds are given on an eligibility basis, with prospective homebuyers assessed against the Annual Median Income (AMI) for the area. Homebuyers with income of only up to 50% of the AMI are classified as “very low income,” and have the highest priority. Homebuyers with income between 50% and 80% are classified as “low income” and may also have a priority for funds, depending on local government policies.
However, homebuyers with income as high as 140% of the AMI may still be eligible as “moderate income.” While these homebuyers will not have as large amounts to apply for, they can still receive funds under SHIP. Therefore, it is always worth a homebuyer applying for SHIP funds if they are under 140% of the area’s AMI—a point many homebuyers are not aware of.
In addition to the income levels mandated by Florida Housing, local governments often have their own eligibility requirements. Some common ones are:
These are not required by Florida Housing, so different local governments may have different policies. You will be able to find out the specific requirements for your area fairly easily at your local government’s website.
As SHIP is managed by local governments, homebuyers need to apply to them early in the house hunting process. As a realtor, you’re in an excellent position to help homebuyers with SHIP because applications should be done as soon as possible. If a homebuyer leaves it until they have found a home, they may not receive the funds in time to help with closing costs.