For most Florida renters who expect to stay put for a few years, buying wins on the math. A mortgage payment close to your rent covers a home you control, part of every payment becomes equity, and a homestead home in Florida carries a cap on how fast its taxable value can rise. Rent buys a place to live for the month and nothing after. When something does call for a short wait, it usually has a clear end date.
What your rent would buy
Take a Florida renter paying $2,400 a month. With FHA at a 5.75% rate on a 30-year fixed, property taxes at about 0.90% of the price a year and homeowners insurance of $283 a month, that same $2,400 is the full payment on a home of about $305,800.
| Piece of the payment | Monthly |
|---|---|
| Principal and interest | $1,752.37 |
| FHA monthly mortgage insurance | $135.26 |
| Property taxes | $229.37 |
| Homeowners insurance | $283.00 |
| Total | $2,400.00 |
The down payment at 3.5% is about $10,700. With FHA 100% financing, a down payment assistance second covers that 3.5%, so a renter with a 580 score or higher can buy without saving it first. To qualify for a $2,400 housing payment under FHA's 46.9% housing ratio, the buyer needs gross income of $5,117.27 a month ($2,400 ÷ 0.469), or about $61,400 a year, and two incomes or a co-signer's income can be combined to reach it.
Five years of renting next to five years of owning
| After 60 months | Renting at $2,400 | Owning at $2,400 |
|---|---|---|
| Total paid | $144,000 | $144,000 |
| Loan principal paid down | $0 | $21,733.93 |
| Equity from payments | None | $21,733.93 plus the 3.5% down payment |
The loan starts at $300,283.09 (the base loan plus FHA's 1.75% upfront premium) and stands at $278,549.16 after 60 payments. Any rise in the home's value adds to that equity. And this example doesn't count Florida's homestead exemption, which takes up to $50,000 off the taxable value of the home you live in and would lower the tax line above.
The payment also stays put. Principal and interest on a fixed-rate loan never change. Taxes and insurance can rise, but the Save Our Homes cap limits yearly increases in a homestead's assessed value to 3% or the change in the consumer price index, whichever is lower. A lease has no such cap, and the rent can go up at every renewal.
Timing the move from renting
- A waiting period ends soon. After a bankruptcy or foreclosure, FHA's wait has a fixed end date (2 years after a Chapter 7 discharge, 3 years after a foreclosure), and renting until then is part of the plan to buy.
- One debt payoff changes the numbers. If paying off a car or a card in the next few months moves your ratios inside the limits, waiting that long can raise your price by tens of thousands.
- Your lease has a few months left. A purchase usually closes 30 to 45 days after the contract, so you can time the keys to the lease end.
Owners also pay for repairs and upkeep that a landlord used to cover, so set a little aside each month for them once you move in.
What it takes to stop renting
FHA needs 3.5% down at a 580 score, and FHA 100% financing covers it with an assistance second. VA and USDA lend with $0 down to eligible buyers. The seller can pay up to 6% of the price toward FHA closing costs, a family member can gift the down payment, and a parent or grandparent can co-sign without going on the title. Your rent stops counting once you buy, so lenders figure your ratios on the new house payment alone.
Enter your rent in the rent vs own calculator to see the home price it matches and five years of each side by side. If the numbers show you could own for about what you pay now, call AAA Capital Funding at 888-601-8344 and we'll show you the program that gets you in with the least cash.