USDA Mortgage Loans – Home Seller Information

USDA FactsWe write tons of information related to home buyers and USDA loan process. However, very rarely do we discuss important things Florida home sellers need to know.  After all, many home sellers like to know what to expect in terms of their buyers financing and ability to actually close.   First a little background,  the  USDA home loan, also known as the USDA Rural Development, 502 Guaranteed Housing Loan Program, or “Rd” Loan is a mortgage loan offered to rural property homebuyers by the United States Department of Agriculture.  The USDA loan program is a government mortgage program that is backed by the USDA and provides a number of homeownership opportunities across Florida for little to no money down.  Very similar to the other government home financing options like FHA and VA loans.  Here is some information and things that home sellers should know –

  • The USDA program does not have any set loan amount limits. The homebuyers qualify based on what their debt to income ratios permit. The limit for USDA loans is 29% for housing expense.
  • Any single family home that is located in a USDA approved location is ok for financing. Single Family, Townhomes and select condos are all ok. No mobile or manufactured homes. Like all government home loans, the house does need to meet all HUD standards. It’s need to be immediately livable and good condition, cannot be a rehab type project. Again, pretty much the same as FHA and VA home loans.  Single Family, Townhomes and select condos are all ok.
  • Sellers are allowed to pay up to 6% of the buyers closing costs and pre paids.
  • Sellers are not required to pay certain “non allowable” closing costs – like in the case of a VA loan. Saves home sellers money.
  • The USDA housing program does not require any special home inspections.
  • USDA appraisal process is essentially the same as a conventional loan. However, the value of any in ground swimming pool cannot be included ( This rule is expected to change in 2015)
  • USDA closing times do take about 10 days longer when compared to FHA and Conventional loans. In Florida, the time it takes from contract to closing is typically 40-45 days….. not 60 or 90 days as many assume.
  • The USDA mortgage allows more home buyers to enter the Florida housing market since the program permits 100% financing.

Sellers should have no concerns about a accepting a USDA buyers offer.  Like many things in regards to mortgages, a lot comes down to the lender and their ability to communicate and close loans efficiently.  Questions?  Please call us at 904-302-6060 7 days a week, You can also fast track your request by submitting the information request form on the right side of this page.

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Steps To Apply For USDA Loan

USDa loan applicationApplying for USDA mortgage is rather easy, the entire application process only takes about 15-20 minutes to complete.  The USDA mortgage process is very similar to other loan programs. The key difference is that your USDA Home Loan is submitted to Florida USDA Field for final approval once the lender is underwriting process is complete.  It’s a two step process. Below we will detail the steps to apply for USDA loan and some steps and things homebuyers want to do to prepare for the USDA pre-approval  – loan application process.

  • First, be sure to tell us your goals, our first priority is to help you fulfill your dreams of homeownership. But to help us do so, we need to know a little about your goals. What type of loan you are applying for? 100% USDA Loan, FHA Mortgage, VA Mortgage, etc.  If you aren’t sure, that’s ok. Your mortgage loan advisor will discuss the difference between the programs, pro’s and con’s and things you need to know.   If you are applying for the USDA Rural Home loan, be sure you first meet the eligibility factors in regards to property location and household income limits.
  •  Second, be sure to know all the basic questions that will be asked by the mortgage lender – Last (2) years of address history.   Last (2) years of employment history – know the address, phone number, length of employment, salary.  Date of Birth, Social, contact information.  Also know your asset / bank information. The name of each bank and your balance in each account.  Will you be the only borrower listed on the mortgage application?  If not, be sure you have all the above for the co applicant as well.
  • Third, what is your timeline? Is homeownership something you want to accomplish in the next few months? Few years?  Let the loan officer know your timeline and they will help you better prepare.

To get started on your Florida USDA loan application, call us Monday – Sunday at ph: (904) 302-6060. You can also advance your request and have a specialist contact you today by submitting the information request on the right side of your screen.  Serving all Florida home buyers including those in St. John, Duval, Nassau, Clay and Baker County –  Jacksonville, Palm Coast, St. Augustine, Callahan, Yulee, Hilliard, Orange Park, Green Cove Springs.

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Typical USDA Loan Closing Costs

USDA Florida Closing CostsMany buyers ask what they should expect in regards to USDA Rural Housing closing costs, who pays what portion? etc.  It’s important to remember each state can be different in regards to government related fees.  Buyers need to understand that many different parties are involved in a real estate transaction. As a result,  many of the closing costs are not related directly to the lender. In Florida, lenders will customary charge a underwriting and processing fee, that should be about it. All the other costs are related escrow reserves and  third parties like –



Home Inspector.

Government recording, intangible taxes, Document stamps.

USDA 2% funding fee.

Title and closing fees –  Title Insurance, Title endorsements.

Escrow reserves for taxes and 1 year home insurance.

General rule of thumb is all the closing cost AND prepaid escrows will be about 2.5% – 6% of the purchase price. The higher the sales price, the less percentage of closing costs would be needed. The reason for this is many of the closing costs are fixed, and the price stays the same regardless of the home purchase price.  Example – the appraisal charge will costs about $425.00 regardless if the home purchase price $65,000 or $200,000. Ditto for the lender underwriting fee, it will stay the same regardless of the home purchase price.  There are other closing cost fees like this.

In Florida the home buyer will pay “customary” closing costs and the seller will also have their “customary” closing costs that they pay.  However, none of this is set in stone, who pays what closing cost is totally negotiable on the purchase contract.  One great benefit of the USDA loan is the program is still 100% financing and does not require any down payment.  In addition, the USDA Rural Development loan allow the home seller to pay all the buyers customary closing costs and prepaids escrows – up to 6% of the purchase price. This is great because many buyers can structure their purchase contract in a way where they put very little to $0 into the transaction.

Keep in mind all of the above is regards to a USDA purchase loan.  The USDA Refinance Closing Costs are often times less because the USDA refinance is more streamline and may not require a new appraisal and survey. Also keep in mind that some lenders /banks may advertise “no closing costs” mortgages. Although this may appear to be a great deal on the surface, most the time the lenders are just increasing the borrowers interest rate to cover the closing costs. There is nothing “unique” about doing a no closing costs loan, pretty much any lender can provide this option to a loan applicant if requested.

Read more about Typical USDA Loan Closing Costs here and other USDA RD Loan FAQ’s here.  Please reach out to us if you have any questions about getting started on your Florida USDA loan pre-approval, we want to help!  You can call ph: 904-302-6060 or just fill out the short information request form on the right side of your screen. We are open 7 days week 9am-8pm.

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FHA Mortgage – Fills the Gap

fha_loansSome homebuyers may not be eligible for USDA financing due to location (not rural approved)  or household income.  The FHA mortgage is a great program to fill the gap for those buyers that are not USDA approved.  FHA home loans are the easiest type of real estate loan to pre qualify for assuming you have the required 3.5% down payment needed. The FHA loan requirement guidelines for loan qualification are pretty flexible, below we outlined some details:

FHA Mortgage requirements:

  • Two Years of steady employment, with no large gaps.  Same line of work preferred, same employer not as important.
  • Credit report should be minimum credit score of 620 or higher or in some cases no credit score at all.
  • Bankruptcy’s must be at least three years old, with perfect credit since discharge. ( this wait time can vary from lender to lender)
  • Foreclosure must be at least five years old, with perfect credit since. ( this wait time can vary from lender to lender)
  • Your new mortgage payment should be approximately 30% of your gross (before taxes)  income.
  • Buyers will need at least 3.5% for a down payment. This down payment can be a “gift” received by family.

FHA Loan Advantages:

  • Unlike USDA loans, there are no rural location requirements or household income limits.
  • Relaxed Credit Guidelines – FHA loans can be done with credit scores down to 620. Sometimes a little lower if the applicant has more money to put down.
  • Super Low Interest Rates and Low Monthly Mortgage Insurance – A distinct advantage of an FHA insured loan, as compared to a conforming loan, is great interest rates and lower monthly mortgage insurance (MI). Depending on the program, standard FHA loan interest rates are usually better than a conforming 30 Year Fixed loan.
  • Safest ARM Currently Available on the Market – FHA guidelines give you the option of doing hybrid Adjustable Rate Mortgages (ARM), including a 5/1, 3/1 ARM and a one year ARM that has the lowest adjustment caps of any ARM in the industry. In addition all the common fixed rate options are available as well.
  • Variety of Property Types Allowed – While FHA Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and 1-4 family residences, in which the borrower intends to occupy one part of the multi-unit residence.
  • Streamlined FHA Refinance and Assumable Loans – One of the most important advantages of an FHA loan is the ability for the loan to be assumed. This gives the buyer a significant advantage in a high interest rate market. FHA loans are eligible for streamlined refinance, a program HUD offers that allows the borrower to easily refinance the loan to reduce their interest rate and lower their monthly payment.
  • Closing Costs –  FHA allows the home seller to pay up to 6% of the buyers closing costs!

Learn about all the FHA commonly asked Q&A here.  Please call ph: 904-302-6060 to learn more about FHA lender pre approval requirements. Be sure to visit for more info.

Serving all of FL, including South Florida – Jensen Beach, Jupiter Island, Ocean Breeze Park, Palm City, Sewall’s Point and Stuart. Belle Glade, Boca Raton, Boynton Beach, Briny Breezes, Canal Point, Cloud Lake, Delray Beach, Glen Ridge, Golf, Greenacres, Gulf Stream, Haverhill, Highland Beach, Juno Beach, Jupiter, Lake Clarke Shores, Lake Park, Lake Worth, Lantana, Loxahatchee, Manalapan, Mangonia Park, North Palm Beach, Ocean Ridge, Pahokee, Palm Beach, Palm Beach Gardens, Palm Beach Shores, Palm Springs, Riviera Beach, Royal Palm Beach, Sandcut, South Bay, South Palm Beach, Tequesta, Wellington and West Palm Beach. Coconut Creek, Cooper City, Coral Springs, Dania Beach, Davie, Deerfield Beach, Fort Lauderdale, Hallandale Beach, Hillsboro Beach, Hollywood, Lauderdale Lakes, Lauderdale-By-The-Sea, Lauderhill, Margate, Miramar, North Lauderdale, Parkland, Pembroke Pines, Plantation, Pompano Beach, Port Everglades, Southwest Ranches, Sunrise, Tamarac, West Park, Weston. FHA Mortgage – Fills the Gap

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USDA Loan Final Approval – Closing Time

USDA closing time

Below we will discuss the time frame for USDA Rural Housing loans in 2014 – 2015. How long each step takes and what home buyers should expect during the process.  Keep in mind the timeframes listed below start AFTER a buyer has a fully accepted contract to purchase a home.  The initial USDA pre qualification process (before contract) only take about 20 min to complete, please contact us for more details on this.

First, it’s important to remember that USDA RD home loans go through a two step approval process. First, the USDA approved lender does all the  underwriting on the 502 Guarantee loan  – this includes documentation, appraisal, inspections, etc.  Once the lender/bank is finished they approve the file and then send to USDA for the final approval or “final commitment” as it’s know.  Once the USDA office has the file, they generally take about two weeks to issue the final commitment and send back to the lender for closing.  This time can greatly change based on the state, volume, etc. But the Florida USDA office has been taking about 1-3 weeks for most of 2014.  Ok, let’s break it down below:

Step 1 – Homebuyer goes under contract to purchase a home, the loan process begins. The lender will begin all the paperwork with the homebuyer at this point –  order appraisal, coordinate title work, insurance, among other things.  Generally this entire process will take a few weeks on average to complete.

Step 2 – Lender underwriting and approval is complete – loan file is sent to USDA Rural Development office for final commitment.  Again, the time USDA takes can vary greatly based on location and volume. But in Florida applicants should expect this part of the process to take 1-3 weeks. Your lender should know the current USDA turn times in your area once your loan file is sent.

Step 3 – USDA issues final commitment, and loan is clear to close.  Basically at this point the lender and title agent will work to draw up the final closing documents. This generally takes a few days, after this the buyer will close on their new home!

The entire USDA mortgage closing time will take about 35-40 days on average from contract to closing.  Sometime things come up in the process that can add small delays to the process.  Buyers need to remember there are MANY moving parts to a real estate transaction. You have realtors, mortgage company, title agent, appraiser, home inspector, home insurance agent, surveyor… this list goes on. However, a good realtor and mortgage lender can manage the process to insure everything runs smoothly.

If you are a new homebuyer and have questions about the USDA loan pre-approval process in FL or GA, please contact us at 904-302-6060 or just submit the quick info request on the right side of your screen →

Buyers that have questions about an existing USDA loan currently in process will need to contact their lender direct for status updates.

Also be sure to read the latest USDA frequently asked questions here. USDA Mortgage Source is Florida’s leading 100% USDA loan resource serving you 7 days week.

USDA Loan Final Approval – Closing Time

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