USDA Loans Pros and Cons


We are often asked by first time home buyers which loan is better? USDA Rural Housing, FHA or maybe Conventional Fannie Mae loans?  Below we have listed some pros and cons to each program to help Florida homebuyers better decide.

USDA Rural Development Loans:  Pros

  • USDA 502 Guarantee loans is the only mortgage program in Florida (unless military) that still allow 100% financing with no down payment.
  • Loan qualifying criteria and credit standards are very flexible.
  • Monthly mortgage insurance (PMI) is three times less when compared to FHA loans. Big advantage to USDA
  • Home seller is allowed to pay all buyers closing costs and escrows.

USDA Rural Development Loans: Cons

FHA Mortgage Loan: Pros

  • With FHA the property can be located anywhere in FL, no restriction on location. Downtown Tampa, Orlando, Jacksonville.. all ok.
  • No household income limits with the FHA program.
  • FHA is probably the easiest mortgage to get qualified for in regards to credit.
  • In most cases FHA interest rates are the lowest available.
  • Non occupying co-borrowers are permitted with FHA loans.
  • Deferred student loan debt can be excluded from debt to income ratios under certain restrictions. This can allow borrowers to potentially qualify for a higher purchase price.
  • Home seller can pay all buyers closing costs and escrows, up to 6%.

FHA Mortgage Loan: Cons

  • Homebuyers must be down a minimum of 3.5% for a down payment – this program is not 100% financing. However, the down payment of 3.5% can come as gift from family, etc.
  • The monthly mortgage insurance costs is much higher when compared to USDA loans.
  • Like USDA loans,  the FHA monthly mortgage insurance costs is paid for the life of the loan in most cases, read here for FHA details.

As for conventional loans, these loans generally require a min of 10% down payment to be possible.  However the mortgage insurance is not required if borrowers put down 20% or more.

Do you have question? Give us a ring at 904-302-6060 or just submit the quick info request on the right side  →

Florida & Georgia home buyers interested in the FHA loan can visit for more details.

USDA loans pros and cons

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USDA Loan Pre-Approval Qualifying Advice

USDA Mortgage Source

USDA Mortgage Source

Getting pre approved for a Florida USDA loan isn’t much different than other mortgage programs like FHA, VA or Conventional loans.  Below we have outlined some tips and things you will want to know before starting your USDA loan application. Keep in mind the entire USDA Rural Development loan application process is typically done over the phone and only takes about 15 min to complete.  Most of the information asked during the USDA loan app are things you know by heart,  Ex:  Current employer, address, income, birth date, social, etc.

Applicants will want to have a few documents handy when starting their loan application:

  • Last 2 years of W2 and tax returns.
  • Last 2 months of bank account statements.
  • Last few pay stubs.

Below we have listed some common questions we receive from borrowers before the application. Take note as this is very helpful information:

  • I want to switch jobs, do I need to be working on with my new employer for two years?   No, you do not have to be employed with the same employer for two years. However, it is helpful that you have a constant two year work history.  It’s also a good idea to remain in the same line of work.  As long as you don’t’ have any unexplained gaps in employment (over a month) you are fine.  As for self employed borrowers, you will need a min two year history before your income can be considered by most lenders.
  • I understand USDA Rural Development has income limits for the family?  Yes, the USDA income limits can be found here. Applicants need to remember these household income limitations apply to everyone living in the house, even if that person is not listed on the mortgage loan application.  Example:  Dan and Mary are first time buyers looking to purchase a home in Volusia County.  Both of them work full time and their combined income is $55,000 per year, well under the income limit of $74,750. In addition to their income, Mary’s mother Jean will also be living with them in the new house. Jean will not be on the mortgage application with Dan and Mary, however Jean has a part time job and her monthly income of $1,000 will need to be included into the household income limits.  So for USDA eligibility purposes the household income will be $67,000 per year.
  • What if my income goes up and over the USDA limit in the future?  USDA is only concerned with the household income at the time of closing, not the future.
  •  Should I find a house I like first and then get my USDA loan pre-approval?   Actually the opposite, it’s best to make sure you are pre-approved and qualified before shopping for a home. In addition, your Realtor and home sellers will likely request this. 
  • How long does the USDA closing process take?  Once you are under complete contract, the process with underwriting and inspections take about 40 days to complete.  You will typically close on your new home 40-45 days after your contact is been agreed upon. 
  • My girlfriend and are planning to get married in the next year, can we both still be on the USDA mortgage application together even though we aren’t married now?  Yes, it’s perfectly ok for you both to be on the application now.
  • I’m a first time home buyer and my parents are giving me some money to help purchase a home, is this ok?   For sure, USDA has no issue with gift funds from family, etc.   Just be sure you can document the money property – make a copy of the check and save the deposit slip.
  • Can I purchase a bank owned foreclosure or short sale home with the USDA loan?  You sure can!  Just make sure the home is in good “livable” condition – basically a home you can move right into.  Also be sure the house is located in a USDA approved zone.

Home buyers can view many more USDA FAQ’s here  Questions? Reach out to us by calling ph:904-302-6060 or just submit the quick request form to the right →

Florida & Georgia’s USDA loan leader serving: Lakeland FL, Sarasota, Tallahassee, Gainesville FLA, Ocala, Daytona, Deland, Deltona, Winter Garden, Clermont, St. Augustine, Orange City, Spring Hill, Winter Haven, Plant City, Fort Myers, Lake City, Destin, Pensacola, Jacksonville, Orlando, Lakeland, Kissimmee, Brandon, Naples, Lake City, Riverview , Macon, Albany, Savannah, Atlanta. 

USDA Loan Pre-Approval Qualifying Advice

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USDA Loan Rural Refinance- Homeowner Q&A

Below we have listed some on the commonly asked questions for the new USDA Pilot Refinance program available here in Florida.  Do you have a question? Please contact us at (904) 302-6060 or just fill out the short USDA request form on the right side of this screen →

All the USDA refinance requirments can be found here

Question: I received a FHA back in 2010, can I use this new USDA program to refinance my mortgage?  H.Leven – Ocala FL

Answer:   The program is only reserved for homeowners that currently have a USDA RD mortgage. Homeowners with an FHA mortgage can click here to learn about the FHA streamline refinance program in FL.

Question:  I purchased my home around 5 years ago using the USDA Rural Housing mortgage. I currently owe around $200,000 on my loan, but the value of my home has gone down a lot and have negative equity. I  believe my house is only worth around $150,000 now.  Will I still be eligible for this USDA refinance?     G. Jackson – Tallahassee FL

Answer:  Yes, the program allows for unlimited loan to value (LTV) – it does not matter how much you are underwater or “upside down” on your home loan. No new appraisal is needed with the Pilot refinance program.

Question:  What are some of the main requirements lenders look for with the USDA Pilot refinance loan?  S. Gordon- Clermont FL

Answer: First, the homeowners must have a USDA Rural mortgage with NO late payments in the 12 months. Second, income eligibility requirements do apply for anyone living in the household and earning any income – even if they are NOT on the loan application. The household income must be under the limits in place for each county in Florida. Please click here to learn more. This same USDA income requirement applied to household when the home was originally purchased.

Question: How do the closing costs work for the USDA refinance, how much money do I need to plan to bring to closing? T. Ruben –Wesley Chapel FL

Answer:  All closing costs, tax and insurance escrows plus the USDA guarantee fee can be rolled into the new loan if the homeowner likes. There are no out of pocket costs to the homeowner.

Question: I paid the 2% Guarantee fee to USDA when I received my loan a few years back. Will I need to pay this fee again if I decide to refinance my home.  J. Fernandez – Collier county

Answer: Yes, the USDA Pilot refinance program will require a the 2% Guarantee (or funding fee) that can be rolled into your new loan along with all closing costs.

Question:  I heard the USDA requires a monthly mortgage insurance costs now? I didn’t have this when I originally received my loan in 2009. Is this required with the refinance?  A. Hassell – Winter Garden FL

Answer:  Great question.. Yes, all USDA loans originated after October 2011 require a small monthly mortgage insurance premium to be paid each month. This is for both refinance and purchase loans.  Homeowners that received their USDA loan before Oct 2011 do not currently have this monthly charge.  If their loan is refinance into a new loan, it will be required for the life of the loan – 30 years. The amount of the fee is .40% of the loan amount,  very small when compared to other loans like FHA , etc.  During the evaluation the USDA loan specialist will review this with you in detail. They will check to insure the savings plus lower interest rates will still make sense with the monthly mortgage insurance charge being added.

Question:  Are the terms of the new refi program the same as my original loan?  V.Braddock – Lakeland, FL

Answer: Yes, standard USDA 30 year fix terms with no early payoff penalty.

Question: Do I need a certain credit score to do this program?  R.Santiago – St. Augustine FL

Answer:  No, on-time mortgage payment history over the last 12 months will be the primary item reviewed.

Question: How much lower will my interest rate be? H.Daniels – Lake City, FL

Answer: That depends since USDA interest rates change each and everyday until locked in.  However, the Pilot program guidelines require the homeowners new interest rate be at least 1% below their current rate in order to meet the min benefit policy.  As of July 2014, interest rates are at their lowest point of the year! It’s a great time to look into the refinance program.

Question: I heard the USDA approved map (locations that are considered eligible) may be changing on October 1, 2014. I purchased my home in 2006 and obviously it was USDA eligible. What happens if my house is not eligible after the map changes, will be I still be able to refinance?

Answer:  Yes, you are grandfathered in regardless if the rural approved locations change in the future.

Question:  I read online that the USDA Pilot program is only offered for a limited amount of time, to limited states? 

Answer: Yes, the Pilot refinance program is set to expire at the end of 2014 unless extended.

Please contact us at with any questions about USDA refinance or purchase loans here in Florida. Please note the USDA Loan Rural Refinance (Pilot program) is set to expire end of 2014.

USDA Loan Rural Refinance- Homeowner Q&A – July 2014


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Florida USDA Interest Rates

Great news for prospective new home buyers in Florida – USDA interest rates are currently at their lowest level in all of 2014.  Now is a great time to lock in and take advantage of ultra low USDA 30 year fix rates.  100% USDA Rural Development financing and super low rates makes this a great time to close on your dream home. Please browse our USDA blog here or visit our main website for all the loan requirements.   Current homeowner that already have a USDA mortgage should also see if refinancing their loan makes sense. The USDA Pilot Refinance program is a simple and streamline way to refinance your currently USDA loan to a lower rate. Regardless of your home’s current value as the program permits unlimited low to value!

If you have questions, please let us know by submitting the quick info request form on the right side of your screen.  You can also call us at 904-302-6060 seven days a week.

Serving –Alachua, Altamonte Springs, Anna Maria, Apalachicola, Apopka, Atlantic Beach, Auburndale, Aventura FL, Avon Park, Bal Harbour, Bartow, Bay Harbor Islands, Boca Raton, Bonita Springs, Boynton Beach, Bradenton, Brooksville, Cape Canaveral, Cape Coral, Casselberry, Celebration, Chipley, Cinco Bayou, Clearwater, Clewiston, Cocoa, Cocoa Beach, Coconut Creek, Coral Gables, Coral Springs, Crystal River, Dania Beach, Davie, Daytona Beach, Deerfield Beach, DeFuniak Springs, DeLand, Delray Beach, Deltona, Destin, Dunedin, Eagle Lake, Edgewater, Edgewood, Eustis, Fort Lauderdale, Fort Meade, Fort Myers, Fort Myers Beach,Fort Pierce, Fort Walton Beach, Fruitland Park, Gainesville, Greenacres, Green Cove Springs, Gulf Breeze, Gulfport, Haines City, Hallandale Beach, Hawthorne, Hialeah, Hialeah Gardens, Highland Beach, Hollywood FL, Holly Hill, Holmes Beach, Homestead, Hypoluxo, Indialantic, Jacksonville, Juno Beach, Jupiter, Key Biscayne, Key West, Kissimmee, LaBelle, Lady Lake, Lake Alfred, Lakeland, Lake Mary, Lake Park,Lake Wales, Lake Worth, Lantana, Largo, Lauderdale By The Sea, Lauderhill, Leesburg, Lighthouse Point, Longboat Key, Longwood, Maitland, Marco Island, Margate, Melbourne, Melbourne Beach, Milton, Minneola, Miramar, Mount Dora, Naples, Neptune Beach, New Port Richey, New Smyrna Beach, Niceville, North Miami, North Miami Beach, North Port, Oakland Park, Ocala, Ocean Ridge, Ocoee, Okeechobee, Oldsmar, Orange Park, Orlando, Ormond Beach, Oviedo, Palatka, Palm Bay, Palm Beach, Palm Beach Gardens, Palm Coast, Palmetto, Panama City, Panama City Beach, Pembroke Pines, Pensacola, Pinecrest, Pinellas Park, Plant City, Plantation, Pompano Beach, Ponce Inlet, Port Orange, Port St. Lucie, Punta Gorda, Rockledge, Royal Palm Beach, St. Augustine, St. Augustine Beach, St. Cloud, St. Pete Beach, St. Petersburg, Safety Harbor, Sanford, Sanibel, Sarasota, Satellite Beach, Seaside, Sebastian, Sewall’s Point, Shalimar, Stuart, Surfside, Tallahassee, Tamarac, Tampa, Tarpon Springs, Tavares, Temple Terrace, Titusville, Treasure Island, Valparaiso, Venice, Vero Beach, Wellington, West Melbourne, West Palm Beach, Weston, Wilton Manors, Winter Garden, Winter Haven, Winter Park, Winter Springs, FL. USDA interest rates, USDA lender, USDA brokers

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Mortgage Home Loan Approval Advice- Teacher Program

USDA Mortgage Source

USDA Mortgage Source

Below we have listed some tips for helps Florida teachers glide through the mortgage pre approval and application process. Regardless if you are looking for a No down payment USDA mortgage, FHA home loan or conventional loan, the tips below will help.  The great news is all of Lake City, Live Oak, and Madison FL is approved for $0 down USDA home financing!  USDA RD is a perfect teacher loan program.

One of the first things a lender or bank will want to see is evidence of full time employment. This is usually done by providing recent tax returns and paycheck stubs.  However, some FL teachers only work part time or are considered “full time substitutes” who may or may not work a consistent 40 hour work week.

When a lender reviews part time income for qualifying purposes, a two year history of part time work needs to be documented. If the teacher has been working for a minimum of two years and can document that work history by providing W2 statements from the statements along with a letter from the school then the lender can use the teacher’s income in order to help qualify.

If you are a Florida full time teacher but don’t have a two year history of teaching then you will need to find your transcript from your college showing your graduation date.  If you’ve just graduated, are working full time and can provide recent paystubs to prove it then the lender can in fact use your income for qualifying.

It’s also important to properly calculate your monthly income.  Lenders use a debt-to-income ratio which is a number calculated by dividing total monthly debt by the gross monthly income.  For example, your total housing payment plus your car payment might be $1200 per month and your gross income is $3000 per month.  $1200 divided by $3000 is 40%, well within debt ratio guidelines.

Common mistakes teachers can make when figuring monthly income is making sure the gross amount is used for qualifying or the amount before any deductions are taken out. Other times a teacher can get paid every other week instead of twice per month.  If a teacher makes $1500 every 2 weeks, that works to 39,000 per year or $3,250 per month. Correctly documenting income for teachers is easily accomplished when the proper procedures are followed.  So go ahead, dig out those forms and give us a call at 904-302-6060 or just submit your quick info request form on the right side of this page.

All of Hamilton, Suwannee, Madison and Columbia County are eligible for the USDA Rural Housing program. Visit to learn about 100% home financing qualifying requirements.

Proudly serving all teachers in Madison County, Hamilton, Suwannee and Columbia County – including Madison, Eridu, Greenville, Lee, Branford, Dowling Park, Live Oak, McAlpin, O’Brien, Three Rivers, Wellborn, Fort White, Lake City, Lulu, Watertown, Jasper, Jennings FL, White Springs FL, Teacher Program

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