On a typical Florida starter home, the amount you need to save runs from under $3,000 to about $25,500, depending on which loan you use and how much help you get from the seller. The down payment is only part of it. Closing costs and prepaids add almost as much again, and the two biggest ways to cut the total are a seller credit and FHA 100% financing.
What the money goes to
- Down payment. 3.5% on FHA at a 580 score, 3% on a Conventional single-family home through first-time buyer programs, and $0 on VA, USDA and FHA 100% financing.
- Closing costs. Lender, appraisal, title, settlement and recording fees, plus two Florida taxes on the loan: documentary stamp tax on the note at $0.35 per $100 and intangible tax at 0.2%.
- Prepaids. The first year of homeowners insurance, interest from closing to the end of that month, and the opening deposit into your escrow account.
- Earnest money. The deposit that goes with your offer. It's credited back at closing, so it counts toward your total instead of adding to it.
- Inspections. The home inspection, plus the four-point and wind mitigation reports Florida insurers often ask for on older homes, are paid directly to the inspector.
A worked example on a $350,000 home
These figures come from the itemized FHA example in the cash to close guide: a $350,000 single-family home, a 5.75% rate on a 30-year fixed, property tax of 0.95% a year and homeowners insurance of $283 a month. Closing costs and prepaids total $13,295.59, about 3.8% of the price.
| FHA, 3.5% down, no help | FHA, 3.5% down, 3% seller credit | FHA 100% financing, 3% seller credit | |
|---|---|---|---|
| Down payment | $12,250.00 | $12,250.00 | $0 |
| Closing costs and prepaids | $13,295.59 | $13,295.59 | $13,295.59 |
| Seller credit | $0 | minus $10,500.00 | minus $10,500.00 |
| Cash to close | $25,545.59 | $15,045.59 | $2,795.59 |
The seller credit is 3% of $350,000, or $10,500. FHA allows up to 6% of the price, so a seller who agrees to about 3.8% could cover all $13,295.59. With FHA 100% financing, the down payment assistance second covers the $12,250 down payment.
A $1,000 earnest money deposit is part of that last $2,795.59, which leaves $1,795.59 for closing day. Saving $250 a month for a year gets you $3,000, enough to cover the whole third column.
How the other programs compare
VA. No down payment, and the seller can pay all of your normal closing costs plus up to 4% of the home's value in concessions, which can cover the funding fee and prepaids. That can leave a VA buyer bringing little more than the earnest money.
USDA. No down payment, sellers can contribute up to 6%, and when the home appraises above the price, closing costs can go into the loan.
Conventional. 3% down on a single-family home is $10,500 at $350,000. With less than 10% down, the seller can contribute up to 3%, and the entire down payment can be a gift from a relative.
2 to 4 units. Reserves enter the picture. FHA requires 3 months of the full payment left in the bank after closing on a triplex or fourplex.
If your savings are short
- Ask the seller for a credit. Write the dollar amount into your offer, based on your estimated costs.
- Use a family gift. Gifts can cover the down payment and closing costs on FHA, VA, USDA and Conventional single-family purchases.
- Choose a $0 down loan. FHA 100% financing works from a 580 score, and VA and USDA need nothing down for those who qualify.
- Add Florida assistance. Florida Housing Finance Corporation and many local programs offer down payment and closing cost help to first-time buyers.
Put your price, a seller credit and any gift into the cash to close calculator to get your own savings target. To build the number from the actual home you want, call AAA Capital Funding at 888-601-8344 and we'll itemize it down to the recording fee.