Can you combine Florida SHIP Funds with a USDA loan?

Can Florida SHIP Funds be combined with a USDA loan?

The goal of Florida SHIP funds is to provide affordable homeownership for first-time homebuyers with very low, low, and moderate-income.

Florida SHIP Funds can be used for a variety of purposes, which include being combined with a USDA loan. In turn, SHIP funds can help maximize affordability!

In today’s video, I will review the basics of Florida SHIP funds and how they can be combined with a USDA loan to help with closing cost assistance.

If you have not yet done so, don’t forget to download our USDA Blueprint for Success. This is a great educational resource that is designed help walk you through the USDA process step-by-step.

State Housing Initiatives Partnership Program (SHIP)

Florida Housing Finance Corporation administers the State Housing Initiatives Partnership program (SHIP) to 67 counties in Florida.

A homebuyer must qualify with the local government entity or housing office that is responsible for handling the program. These 67 counties disperse funding on a first-come-first-serve basis, so you must first determine if your county currently has funding. If they do not, the next questions to ask is, “When is the funding expected to be replenished?”

SHIP qualifying requirements are handled at the local government level and can vary, but common requirements include…

• Applicants must be first-time homebuyers;
• Funding is on a first-come, first-serve basis;
• Maximum purchase prices can vary;
• Completion of a First Time Homebuyer Education course such as HomebuyerFunds.com or Freddie Mac;
• SHIP income limits will apply.

Florida SHIP Funds – Local Housing Assistance Plans (“LHAP”)

The LHAP is a three year housing plan that outlines the strategies that will be utilized by the local government SHIP office. An LHAP is required to be submitted in order to be eligible to receive funding from the State of Florida.

The various local government LHAPS can be found here:  Florida Housing Finance Corporation

Example – Highlands County SHIP Funds

For example purposes, let’s look at Highlands County and walk through important Florida SHIP Funds details:

1. As of 12/4/2022, funding was received by the SHIP office and applications began
2. Assistance is on a first come first serve basis
3. Potential applicants must be within income limits and meet eligibility requirements
4. Award amount is based upon household income and family size
5. Repayment terms include, but are not limited to, the following:
   1. All assistance is provided as a loan, secured by a recorded mortgage and promissory note.
   2. Interest Rate: 0 %
   3. Years in loan term:
      1. 10 years for $0.00-$5,000.00
      2. 15 years for $5,001.00-$10,000.00 loan amount
      3. 20 years for $10,001.00-$15,000.00 loan amount
      4. 25 years for $15,001.00-$20,000.00 loan amount
   4. Not Forgivable
   5. Deferment Period: The loan shall be deferred for 3 years, and repayment will begin after that and will be
      amortized over the term of the loan term.
   6. Remember, repayment terms can vary per SHIP office so make sure to double check!

Additionally, the Highlands County LHAP can be found here: Highlands County LHAP

This example is provided for illustration purposes only and is not a commitment to lend or determination of program eligibility.

Combining Florida SHIP Funds with a USDA Loan

SHIP funds are treated as a second mortgage (subordinate lien), so they must be combined with another mortgage type. When SHIP funds are combined with a USDA loan it offers tremendous flexibility such as being utilized to pay for closing costs as well as reducing how much your borrower on the first mortgage.

Your SHIP funds would be combined with your USDA mortgage to make up the total financing for the property.

This may allow for…

• A portion of your overall financing to be at reduced terms;
• Increased affordability;
• Permit deferred payments;
• Loan deferral or Loan forgiveness after a period of time.*

*Dependent on your local SHIP program guidelines.

How do you qualify for a Florida USDA loan?

It’s vital for you to qualify for a USDA loan in order to be able to combine it with SHIP funds. However, not all lenders work with SHIP Funds… but we do!

In fact, due to our extensive experience and as a top-ranked USDA Approved Lender, we are able to coordinate both your USDA approval and Florida SHIP Funds financing at the same time as we prepare for closing.

Call/Text: 863-593-2001
Toll Free: (800) 806-9836 Ext. 280
SeanS@MPLX.org 

See you next week!