The USDA Rural Development 502 guaranteed loan program offers 100% mortgage financing throughout qualified locations in Florida. With relaxed qualifying terms, minimal mortgage insurance and no loan limits, this program is perfect for FL first time home buyers. While it might seem to be too good to be true on the surface, USDA mortgage loans come with a few eligibility requirements. However, if you and the house meet the USDA’s income and location criteria, the program could be a good option for you.
The key eligibility limitation for the USDA program is that the house has to be in what the USDA considers a “rural” area. Now, it’s important to understand the USDA’s definition of rural is relatively broad. In fact as of 2014-2015 many suburb locations around Jacksonville, Tampa, Orlando, Sarasota, Gainesville FL and Tallahassee ARE approved. Overall, if you aren’t in the middle of a congested metropolitan area, there’s a good chance that your property will be eligible. Call us at ph: 904-302-6060 to talk about your area.
The USDA doesn’t impose any official price or loan amount limits on the home that you buy. On the other hand, the USDA’s income rules do impose a debt to income ratio limit for home buyers. Given that the USDA usually applies a 29 percent front-end debt-to-income ratio to determine how large your mortgage payment can be, a family making $5,500 per month ($66,000 per year) would be limited to a monthly payment of around $1,595, which is $5,500 per month multiplied by the 29% housing ratio cap. As your income goes up or down, your maximum payment can also fluctuate up or down. Then again, the program also has the flexibility to allow higher monthly payments for otherwise well qualified Florida buyers.
USDA Rural Housing limits the type of property can purchase. You aren’t allowed to use a USDA loan to purchase a property with additional units or with any additional structures that you might use for income. For instance, a barn or a legal (and rentable) in-law unit could would likely be ineligible, while a small storage shed probably would not. In addition, if you have an in ground swimming pool, the appraiser will have to subtract its estimated value from your home’s price. Although pools are allowed with the USDA program, this rule regarding the appraised value can often time cause an appraisal issue. Read more about USDA loans and swimming pools here
The USDA limits the properties that you can buy based on their condition and quality. The property has to have adequate mechanical systems and be termite-free. It also has to meet the USDA’s standards for being decent, safe and sanitary. The home must meet all the same HUD standard that apply to other government home loans like FHA, and VA. To qualify for a USDA loan, a home must have a hard or all weather road leading to it as well.
The home the USDA will approve for you varies based on your income and its location. The USDA imposes income limitations that vary by area and your household income can be no more than 115% of the area’s median income. In areas with a $50,000 median income, a household income over $57,500 will disqualify you, since $57,501 is more than 115% of $50,000. On the other hand, in an area with a median income of $95,000, you can qualify to take out a USDA loan as long as your household income is $109,250 or less ($95,000 multiplied by 115 percent equals $109,250). The income limits in most Florida counties for a household of 1-4 members is $74,750. Please see all the latest USDA income limits here. As for the property, USDA will permit any single family home that is located in a USDA approved area, please find the USDA eligibility map here. You can look up your city or an actual address to see if it’s approved. Keep in mind, USDA is not concerned with the home seller or whether the home is being sold as a regular sale, foreclosure, etc. The actual location of the home is what’s important.
Florida home buyers that have questions about the USDA home application process can contact us at ph: 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 your screen. Please be sure to also read all the USDA FAQ’s by clicking here.
Serving all of Florida – Jacksonville, Tampa, Orlando, Sarasota, Gainesville FL, Tallahassee, USDA House Search, Requirements