When purchasing a home, there are different types of loans available to homebuyers. Two of these options are bond loans and TBA loans. 

In our latest episode, we break down housing programs that assist Floridians in buying their first home. We also cover the unique ways they recycle funding to keep the lights on and continue supporting the community.

Here, we’ll explore the key differences between these bond loans and TBA loans and what lenders need to qualify for the Florida Home Buyer Program.

Bond Loans:

Bond loans and TBA loans are both types of mortgage loans, but they differ in a few key ways. A bond loan, also known as a bond program loan or a bond issue loan, is a mortgage loan funded by the sale of tax-exempt bonds. 

Bond loans are often offered by state or local government agencies or housing finance agencies. These loans are designed to help low- to moderate-income borrowers who cannot afford a traditional mortgage loan.

One of the advantages of a bond loan is that they typically offer lower interest rates and require a smaller down payment than traditional mortgage loans. 

TBA Loans:

TBA loans, or "to be announced" loans, are mortgage loans traded as securities on the secondary market. Any government agency or housing finance agency does not back TBA loans. Instead, they are supported by the issuing lender or investor.

TBA loans typically offer more flexibility than bond loans regarding property types and borrower qualifications. However, TBA loans may have higher interest rates and require a larger down payment than bond loans.

Qualifying for the Florida Home Buyer Program

The Florida Home Buyer Program is a state-run program that offers a variety of mortgage loans and down payment assistance programs to help low to moderate-income homebuyers purchase a home. 

To qualify for the Florida Home Buyer Program, lenders will typically require borrowers to meet certain eligibility requirements, including:

1. Income Limits: Borrowers must meet certain income limits based on household size and location. The income limits vary depending on the program and may be based on the median income for the area.

1. Credit Score: Borrowers must have a minimum credit score to qualify for the program. The minimum credit score required may vary depending on the program and the lender.

1. Property Requirements: The purchased property must be in the state of Florida, meet particular requirements, such as being in an eligible area, and meet specific safety and health standards.

1. Debt-to-Income Ratio: Borrowers must have a debt-to-income ratio that meets the lender's requirements. This ratio compares the borrower's monthly debt payments to their monthly income.

1. Employment and Income Verification: Borrowers must provide employment and income documentation, including pay stubs and tax returns.

1. Down Payment: Some programs require borrowers to provide a down payment, while others offer down payment assistance.

Bottom Line

Bond loans and TBA loans are both options for homebuyers who are looking for a mortgage loan. While bond loans are typically offered by government and housing finance agencies, TBA loans are traded as securities on the secondary market. 

They offer more flexibility but may have higher interest rates and larger down payment requirements.

Be sure to tune into the latest episode with Chip White to discover more affordable housing options for Floridians. Also, lenders should tune in to brush up on new changes to better inform their clients!