Frequently Asked Questions

How do property taxes work in Florida, and will my mortgage payment change?

Property taxes are assessed annually by each county. When you purchase a home, the previous owner’s tax rate resets to reflect the new sale price, which often causes your monthly escrow/mortgage payment to adjust upward in your second year. Be sure to file for the Florida Homestead Exemption by March 1st to cap future annual tax increases on your primary residence.

Are there special loan limits or income caps for Florida homebuyers?

Standard limits apply across Florida, but conforming limits vary by year and location. Local assistance programs—such as Florida Housing's Hometown Heroes program—have specific household income and purchase price limits that vary by county across Central Florida (e.g., Orange, Hillsborough, Polk, Osceola).

Do I need flood insurance if I'm buying inland Florida?

Lenders only require flood insurance if the home sits in a high-risk Special Flood Hazard Area (SFHA). However, because Florida experiences frequent tropical storms and heavy summer rain, many inland buyers choose to carry a low-cost voluntary policy for added protection.

What down payment assistance programs are available in Florida?

Florida offers state-backed options like Florida First Time Homebuyer Program and Hometown Heroes, offering 0% interest second mortgages to cover down payments and closing costs. Additionally, individual counties like Orange, Hillsborough, and Pasco periodically offer SHIP or CDBG grants for income-eligible buyers.

How does home insurance affect my loan approval in Florida?

High insurance premiums directly increase your monthly payment and Debt-to-Income (DTI) ratio. Lenders require proof of hazard insurance before closing, and homes older than 15 years typically require a 4-Point Inspection (roof, plumbing, electrical, HVAC) and a Wind Mitigation Inspection to qualify for standard policies and premium discounts.

When does it make sense to refinance a home?

Refinancing is generally worthwhile if you can lower your interest rate, remove monthly PMI/MIP, convert an adjustable rate to a fixed rate, or tap into accumulated equity via a cash-out refinance for home improvements or debt consolidation.

What is a Rate-and-Term refinance vs. a Cash-Out refinance?

A Rate-and-Term refinance changes your interest rate, loan duration, or loan structure without altering the loan amount. A Cash-Out refinance replaces your current loan with a larger one, allowing you to take the difference out in cash based on your home’s accrued equity.

Can I remove FHA mortgage insurance (MIP) by refinancing?

Yes. FHA monthly MIP typically lasts for the life of the loan. Once you build at least 20% equity in your home through property appreciation or mortgage payments, you can refinance into a Conventional loan to eliminate monthly mortgage insurance entirely.

What are the closing costs associated with refinancing in Florida?

Refinance closing costs in Florida typically range from 2% to 4% of the total loan amount. These costs cover lender fees, title search, insurance, county recording fees, and Florida’s intangible tax and documentary stamps on mortgages.

What happens if the home appraisal comes in lower than the purchase price?

If the appraisal is low, you have three primary options: negotiate with the seller to lower the sale price to match the appraised value, pay the difference out-of-pocket at closing, or exercise your contract's appraisal contingency to walk away with your earnest money deposit.

What inspections are mandatory for a mortgage appraisal in Florida?

While a standard appraisal evaluates market value and safety, Florida insurance guidelines usually demand two specific reports for homes over 15 years old: a 4-Point Inspection (verifying system life and safety) and a Wind Mitigation Inspection (checking roof shape, hurricane straps, and window protection).

How does a manufactured home appraisal differ in Florida?

Manufactured homes require real property classification (the home must be permanently attached to real land you own, with the vehicle title retired). The appraiser must use comparable sales of other HUD-compliant manufactured homes built after June 15, 1976.

What is a DSCR Loan, and how does it help real estate investors?

A DSCR (Debt Service Coverage Ratio) Loan qualifies an investment property based solely on its projected rental income relative to the monthly mortgage payment (PITIA). It does not require personal tax returns, W-2s, or employment verification from the borrower.

What if my tax write-offs make my income look too low to qualify?

Self-employed buyers can use a Bank Statement Loan (Non-QM loan). Instead of tax returns, lenders analyze 12 to 24 months of personal or business bank deposits to calculate your actual cash flow and qualifying income.

Can I use a DSCR loan for Short-Term Rentals (STRs) like Airbnb in Central Florida?

Yes. Central Florida is a massive short-term rental market (especially near Orlando theme parks and Gulf Coast beaches). Many DSCR lenders evaluate short-term rental projections using tools like AirDNA or localized market estimates to qualify the property.

Can I buy a multi-family home in Florida with a low down payment?

Yes. You can purchase a 2-to-4 unit property with as little as 3.5% down using an FHA loan, or 5% down using a Conventional loan, provided you live in one of the units as your primary residence for at least 12 months (known as house hacking).

What are the typical down payment requirements for investment properties?

Conventional loans for 1-unit investment properties generally require a minimum of 15% to 20% down. Non-QM options like DSCR loans usually require 20% to 25% down, depending on your credit score and the property’s debt coverage ratio.