What Are S.H.I.P. Funds?

Q: I am a single mother of four, and I was told that there is such a thing as S.H.I.P Funds for purchasing a home. Can you explain what they are and how they work?
— S. Thompson, Via the Internet

A: S.H.I.P. Funds refer to State Housing Initiatives Partnership programs, where lenders, builders, nonprofit groups, and real estate agents collaborate with a specific state to offer down payment and closing cost assistance to first-time home buyers with low incomes. S.H.I.P. is how these programs are referred to in the state of Florida, but many states offer similar assistance programs for low-income residents. Contact your state housing authority and ask about low-income, first-time home buyer assistance programs. (First-time home buyer means that you haven’t owned a home in the last three years.)

In Florida, the amount of funds offered for down payment and closing costs varies from county to county, as does the maximum sale price and the type of home (e.g., single family home, condominium) eligible for the funding. The income eligibility of the household applying for S.H.I.P. assistance varies from county to county as well. For example, to be eligible in Ocala, Florida, a family of four must make no more than $33,300, but in Collier County, Florida, the amount jumps to $54,400.

In most cases, those who want to qualify for assistance must meet income requirements, have been employed in the same job or field for one year, have a satisfactory credit rating, and be prequalified by the issuing mortgage lender. It is also up to the person applying for funding to find a property that is eligible for S.H.I.P. assistance. If all these requirements are fulfilled, the mortgage lender will reserve S.H.I.P. Funds in your name, which will be distributed when you close on your property.

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