Frequently asked USDA RURAL Housing Loan questions

Each day we receive many questions regarding the USDA mortgage here in Florida. Below we have outlined some of the most frequently asked USDA Rural Housing home loan questions. All the information is up to date as of 2016.

Do you have questions? Let us help!  We have loan specialists standing by 7 days week to assist you.  Just submit the short Info Request Form on the right side of this page for fast service. Mobile users can find the Info Request Form here.  You can also contact us at  ph: 904-302-6060   We try to respond to all submitted requests within 15 min during business hours. Florida & Georgia requests only please. Buyers in other states can learn more about National USDA home loans here.

Question: How do I get a USDA home loan application, does it costs anything to apply? H. Carter –  Rivervew/ Hillsbrough County FL

ANSWER:  All Fla & GA home buyers can contact us below to get started on their USDA mortgage application. There is no application fee to apply for the loan.

Question: How do I find a list of USDA homes for sale around Orlando, Florida?  L. Taylor –  Apopka/Orange County FL

Answer: You can find all the Florida USDA approved rural defined locations by clicking on the USDA eligibility map here.  Please click on single family housing under the property eligibility section at the top left.  Once there you can input any address to see if the house is USDA eligible. Keep in mind, the USDA 502 guarantee program can be used for any home purchase regardless of the home seller. The property you purchase can be a bank foreclosure, short sale, HUD owned home, standard “by owner” sale,  etc. USDA Rural Housing is more concerned about where the house is located, as it must be located in an approved USDA rural defined location according to the map above.  The home also must be in decent move in type condition. Buyers cannot use the USDA loan to purchase properties that require extensive work or rehab. In addition, existing mobile and manufactured homes are not permitted.

Question: Is the USDA Rural Housing program only for  Florida first time home buyers? J.Levy – North Port, FL

Answer: No! the program can be used by any qualified home buyer – not reserved for only first time homeowners. However, applicants that currently own a home will have additional restrictions.

Question: Will I required to take some kind of first time home buyers class with the USDA loan program? F. Simmons – Winter Garden, FL

Answer: No class or education is required with the USDA Rural loan. New home buyers can contact us below and get pre-qualified in minutes.

Question:  Can I include closing costs into my USDA mortgage? H Kincaid  – Gainesville, GA

Answer: Yes, you will have two options to do this.  First, the most common way is to negotiate your contract to have the home seller pay your closing cost. USDA Rural Development will permit the  seller to pay up to 6% of buyers USDA closing costs and prepaid escrow items.  Another option is to roll your closing into your loan given the appraised value is high enough to support it.  To use this option, the home must appraise higher than the sales price. USDA will permit buyers to roll in or include closing costs up to the appraised value of the home, not the just the sales price.  You can also do a combination of these two options. Learn more about USDA Closing Costs here

Question: How much are the USDA loan closing costs and pre-paid escrow items? Also,  will the taxes and home insurance included in my monthly mortgage payment?  J. Collier – Tallahassee/Leon County FL

Answer:  The exact amount of closing costs, etc will depend on many different variables like your loan amount, current tax assessment on the home, homeowners insurance policy amount, among many other items.  Generally speaking 3-6% of the sales price is a good estimate depending on how high the sale price is.

As for the taxes and home insurance – this will be included or “escrowed” as part of  your monthly mortgage payment, along with the USDA mortgage insurance,  as required by USDA. So your monthly mortgage payment will include principal, interest, taxes, home insurance and mortgage insurance (PMI)  In addition, your taxes and home insurance will automatically be renewed for you each year.

Question: How much is the USDA appraisal costs, do I pay this fee?  S.Leewood – Live Oak, FL

Answer:   The USDA appraisal charge is typically $425.00 -$500.00. The exact amount can fluctuate depending on the property and lot size.  The USDA appraisal fee is usually paid in advance (to lender or appraisal management company) by the home buyer after the contract is executed and approved.  Depending on how the sales contract /sellers concessions is structured, home buyers can often receive this fee back, along with their deposit at closing.

Question:  Does the USDA program have a loan amount limit, or a cap on how much I can borrow ? D. McCoy – Port St. Lucie, FL

Answer: There is no loan amount limit with the USDA RD program, home buyers qualify based on their debt and income. Please learn about 2015 USDA purchase loan limits here for price limit calculation example.

Question: I found the perfect USDA eligible home, but it needs some repairs. Can I borrow extra money in my loan to pay for new carpet and a new fence in the back yard?  J Vasquez – Winter Haven FL

Answer: Short answer is no, only closing costs can be included in your loan – assuming the appraised value is higher than sales price.

Question: I was reading the USDA housing program allows for 102.75% financing – does this mean we can receive 2.75% extra for repairs or money back. N. Zimmerman – Naples FL

Answer: The USDA 2.75% guarantee fee ( As of October 2015) is the one time fee that is required by USDA Rural Housing.  All government loan programs like USDA, VA and FHA mortgages require the one-time funding fee in order to sustain the programs and limit losses. The fee is rolled into the final adjusted loan amount – Example: Let’s say Betty does a 100% financing USDA purchase on a $100,000 home. Her base loan amount would be $100,000 – however the final adjusted loan amount with the USDA guarantee fee included would be $102,750.

In addition to the Guarantee fee, the USDA loan also requires a monthly mortgage insurance premium like FHA loans but much $$ less each month. ( most know this as PMI)  Please read about the new 2015 USDA Guarantee Fee here.

Question: I found a home that I like, but it has some issues with the roof and electrical.  Will this pass USDA home inspection requirements ? L. Jefferson – Cape Coral, FL

Answer: USDA ( like FHA and 100% VA home loans) follow many of the same HUD requirements when it comes to the property condition.  Generally speaking –  any safety, electrical, plumbing, structural, HVAC, roof, or WDO termite issues will likley need to be corrected before closing.  It really depends on the seriousness of the problem and whether it will be required to be corrected before closing. The appraisers notes along with the lenders underwriter will typically determine this.  Keep in mind many bank owned or distressed homes are being sold “as is” they will not correct or repair anything in most cases.  The house has to generally be in decent overall condition.  Now this doesn’t mean the house as to be perfect, every house has some little issues that are to be expected.  The idea is to insure home buyers are purchasing a home in generally sound condition and don’t get in over their head with serious problems and expenses right after closing. Home buyers looking to purchase a home that needs extensive repairs (and money to do so) should read about the FHA 203K loan.

Question:  What houses are approved for USDA mortgage financing in my area? What type of properties are permitted?  Jose V – Clermont /Lake County FL

Answer:  USDA Rural housing is for ANY single family home, town home, PUD, condo that is located in a USDA eligible location.  The house can be a short sale home, bank foreclosure,  REO, for sale by owner….doesn’t matter.  The important factor is the physical location of the home, it must be located in a Florida rural housing approved location. Existing mobile manufactured homes are not permitted under the USDA program. Building a new home on your own land or lot is also not permitted. However, purchasing a new home (new construction) from a builder is permitted.  Click here to view the USDA map for FL as this will show you all the approved locations in FL.  Many locations just outside of Orlando, Jacksonville, Tampa are currently eligible. Do not assume your location is not USDA Rural housing eligible before checking or calling us, you may be surprised!  If your location is not USDA approved, be sure to learn about the FHA loan application process here. FHA is a great alternative for home buyers looking to purchase in more populated locations.

Question:  I put a contract in a home and was wondering if I need to pay a deposit of some sort?  J. Bryan – Ocala/Marion County FL

Answer:  Typically a deposit will be required from the seller to show your “good faith” on following through with the purchase.  This is often called a escrow binder deposit or good faith deposit ,etc.  For homes in the $100,000 – $200,000 range – typically a $500- $1,000 deposit is customary in Florida.  Some buyers may decide to give more to strengthen their offer and make it look better.  Any deposit money paid in advance will be applied towards the purchase of the home.  Buyers will often times get this deposit money back in the event of appraisal, financing or home inspection issues. It really depends on the contingencies written into the contract, but the items listed above are pretty standard. Insure you check with your realtor.

Question:  I’m under contract to purchase a home now and about to get started on the loan processing. What type of paperwork or documentation do I need to get my USDA loan processed?   Y. Summers – Saint Augustine / St.Johns County FL

Answer: You should make copies of your last (2) years tax returns, W2’s,  Last 2 months of bank statements, last 3 months pay stubs. Also a copy of your drivers license / ID and social security card. There may be additional paperwork needed, but these are the basic things needed for borrower starting the USDA loan process.

Question: I owned a home years ago in the past, and now want to consider purchasing a nice brick home I recently found. Can I purchase this home with USDA loan? I thought the USDA program was only for first time home buyers?  I know the home is located in the approved USDA area.  D Clayton – High Springs, FL

Answer: Yes you can! Any qualified buyer can use the USDA program to purchase their next home. The program is not reserved only for first time homeowners. The home must be a primary residence, no second vacation homes or investment rental homes are allowed.

Question: Is there any USDA loan restriction on how long I must live in my home, or when I can sell my home? B. Gadsden – Port St. Lucie, FL

Answer: No, the USDA mortgage does NOT have any prepayment or early payoff penalty. You can pay off your loan and/or sell your home whenever you like without restriction.

Question: Is there a limit on how much income your household can make each year with the Rural Development program ?  Where do I find this information? L. Bolden – Brandon FL

Answer: Yes, each county has a different limit based on a verify of factors  – number or members in the household, elderly and disabilities. Please click the underlined link to read more about the current 2015 USDA Household Income Limits.  Please remember, the USDA income limits apply to ALL members in the household that generate income, not only the parties on the loan application. The only exception to this is working Full time students.  If they work, their max income included is $480.00 per year…regardless of how much they make.   However, if they are a dependent, this income can be off set and canceled because households always take a $480 deduction for dependents.  If your income appears to be close to the limit, or you just aren’t sure how to calculate it, please contact us so we can formally review with you. We are always happy to help.

Question:  My income is currently under the USDA Collier County limit right now, what happens if I get a raise at my job and my income goes over the limit in the future?  J. Carney – Naples, FL

Answer: The only concern is your household income at the time of closing, not in the future.

Question:  What kind of credit score do I need to pre qualify for a USDA loan?  J Duval – Sarasota, FL

Answer: We currently require a minimum credit score of 620.  However, this min credit score requirement does not guarantee USDA financing. USDA Rural housing has other restrictions in place for applicants that have any past bankruptcy, foreclosure, short sales, or other serious financial hardships.  Mortgage qualifying requirements have changed dramatically over recent years, and still are. Contact today for the latest approval requirements.

Question: I understand the USDA loan is 100% financing. But I have some money saved up and I would like to contribute a down payment, can I do that?   K. Stanford – Spring Hill FL

Answer: For sure! USDA will permit buyers to put 3%, 5%, etc down payment if they choose. However, the 502 Guaranteed program is geared toward buyers that do not have the means (down payment) for a conventional home loan.  If you have 20% for a down payment for example, you will do a standard conventional mortgage.

Question: My Realtor informed me that I cannot get a USDA loan if the house has a pool, is this correct? A. Myers  – Lakeland/Polk County FL

Answer:  Pools are permitted with the USDA program. In the past, the value of the pool could not be included in the home appraisal. However, as of December 2014 this rule has changed to INCLUDE the contributory value of any in ground pool into the property value.  Basically USDA views pool the same now as other mortgage programs.

Question:  I found a property I would like to write a offer on today. But the house is located on a dirt road and my lender said USDA program requirements will not permit this.  Can you clarify this for me before I submit my offer. J Spencer – Homosassa FL

Answer: USDA follows HUD handbook requirements on road guidelines. Basically the road must provide safe vehicle and public access from a public or private road.  Additionally, all roads are required to have an all weather surface and maintained by a road maintenance agreement by all home owners on the street or homeowners association.  Some dirt roads (county maintained especially) are fine and generally approved.  Please contact us for additional clarification.

Question: Can I use the 100% USDA loan to purchase an investment home?   W. Quinn – Palm Coast/Flagler County FL

Answer: USDA can only be used to purchase a primary residence. Second homes and investments properties financing are not permitted.

Question: I have determined that my area in Lee County is eligible for the USDA housing.  What do I need to get together for the USDA loan application and approval process?  G. Miller –  LeeHigh Acres FL

Answer:  Please click the highlighted link to the right to learn about tips about being prepared for your USDA loan application.

Question: I have my USDA housing application complete and have already started looking at houses online.  Do I need to use a certain realtor for this, or will any real estate agent work?  L. Allen – Port Charlotte FL

Answer:  Any Realtor will be ok, just be sure they are working for you and you are happy with them.  If you need assistance finding a great Florida Realtor in your town, please let us know, we would be happy to make the connection for you. We have great partnering realtors throughout FL that understand the USDA loan process well. Learn more about USDA Realtors here.

Question: I was told that the USDA loan takes a real long time to close, is this true? K. Russell – St. Cloud FL

Answer:  As of November 2015 – the entire USDA closing process in Florida takes about 40-45 days from full contract acceptance to closing. The USDA Rural Housing closing turn times do change.  Unlike other home loans, USDA loans go through a two tier approval process with the lender/bank and the actual USDA Rural Development office.  Because of this, the process can take up to 14 days longer when compared to conventional or FHA mortgages.  The good news is USDA has implemented some resent changes and turn times have improved as a result.  Please note, if you are a home buyer and have questions about an existing USDA file you have in process with another mortgage company (lender,broker or bank) you will need to contact them directly to obtain current loan status.

Question: When is my first mortgage payment due after I close on my USDA loan?  G. Franklin – Leesburg, FL

Answer: You normally skip the following month after closing. Example: let’s say you close on your USDA RD loan on November 9th, your first mortgage payment won’t be due until January 1st.  Same applies to a USDA refinance, you can skip up to two months mortgage payments.

Question: How are the mortgage interest rates on USDA loans compared to other loan programs like FHA, VA, etc?  A. Franklin – Tavares, FL

Answer: USDA interest rates are pretty much the same as other government mortgage programs like FHA and VA home loans.  However, USDA loans have significantly lower monthly mortgage insurance (PMI) when compared to FHA loans.  In fact the monthly mortgage insurance ( known as annual fee)  is much less when compared to FHA loans. The FHA monthly mortgage insurance is currently .85% (max 96.5% financing) and the USDA RD program is .50%.  This is important to remember and is a nice benefit of the USDA program.  Even if you have enough savings and can afford the min 3.5% down payment required by FHA loans, you may want to consider the USDA loan just for the reduced mortgage insurance costs. USDA Interest rates do change on a daily basis until the home-buyer is locked in. Home buyers will typically lock in their mortgage interest rate once they have signed a contract to purchase a home and have a closing settlement date established.

Question: I heard the USDA property eligibility map was changing October 1st 2014, but got delayed?  Many locations that are currently eligible for the 100% USDA program may not be in the near future. Can you clarify?  M. Broward – Kissimmee, FL

Answer:   USDA Rural Housing has implemented a new map ( eligible area) as of  2015.  This was previously scheduled to be start multiple times during the past few years,  but was always delayed.  Home buyers can find the new 2015  USDA map here to check a property address for eligibility. If you are NOT located near any USDA eligible housing locations, please submit the short Info Request Form on the right side of this page to discuss alternate min down payment financing options. Mobile users can find the Info Request Form by clicking here. Please bookmark our blog for important updates. Please also note, this map area change does not impact homeowners that currently have a USDA loan and want to refinance  into a lower interest rate.

Question: Do you have a USDA mortgage payment calculator or some place I can figure up my monthly mortgage payment?  E. Sanders – Venice, FL 

Answer:  For sure, just look down at the lower right side of your screen. There you will find a USDA monthly payment calculator that will include principal, interest, monthly taxes, home insurance, monthly mortgage insurance. Tip – be sure to add 2.75% to your loan amount to factor in the 2.75% USDA guarantee fee that will be added to your loan. Example: if you are purchasing a $150,000 home at 100% financing with no down payment, be sure to input $154,125 for your loan amount.

Question: I currently have a USDA loan, what are my options to refinance my loan  into a lower interest rate? I would like to try to lower my monthly payment. Unfortunately I do not have any equity in my home.   L. Sanders – Pensacola, FL

Answer: Please click the highlighted link → to learn about the USDA Pilot Refinance program available here in Florida.

Questions? just submit the short Info Request Form on the right side of this page for fast service. Mobile users can find the Info Request Form here.  You can also contact us Monday – Sunday at PH: 904-302-6060

Serving all home buyers in Florida & Georgia. Home buyers in other states can click here for more USDA mortgage information.

Purchasing a home, but not located in a Rural Development approved area? Click to learn about the →  FHA Mortgage.

Frequently asked USDA RURAL Housing Loan questions, USDA FAQ , Serving the states of Fla & GA including in 2016: Lakeland FL, Sarasota, Tallahassee, Jacksonville, Orange Park, Middleburg Clay, Green Cove, Orlando, Tampa Hillsborough FL, Gainesville, Ocala, Daytona Beach, Volusia, Deland, Deltona, Winter Garden, Clermont, St. Augustine, Spring Hill, Winter Haven, Plant City, Fort Myers, Lake City, Leesburg, Land O Lakes Pasco, Lady Lake, Destin, Fort Walton Beach, Pensacola, Kissimmee, Osceola, St. Cloud, Brandon, Naples Collier County, Cape Coral, Venice, Lake City, Port Charlotte, Vero Beach, Sebring, Port St. Lucie, Crestview, Riverview, Palmetto and Parrish, Manatee,  Live Oak, Madison FL, Valdosta, Macon, Savannah, Atlanta, Albany, Tifton, Columbus

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33 Responses to Frequently asked USDA RURAL Housing Loan questions

  1. Cynthia says:

    I’m applying for a USDA loan, but I have a question. I wanted to know is it against the rules for a boyfriend to give money to his girlfriend toward closing cost as a gift ?

    • Great question. Gift money is allowed for USDA loans to help with closing costs. You just want to insure the gift money is documentable and NOT paid in the form of cash. Be sure to make a copy of the check you receive from the gift donor and also make a copy of the deposit slip when you deposit the gift money into your bank account. A standard gift letter will also be required to be signed by both parties, this is something your lender will provide.

  2. Devin says:

    Is true the USDA program end this year in December?No more USDA loan for 2015?

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  6. Hannah says:

    Do I have to add in home owners insurence and taxes to my usda loan or can I pre pay it at the beginning of the year and show them the paper work for it?

    • Your home owners insurance and tax reserves will be escrowed (held back) on your USDA loan when you close. Included in your total closing costs will be 1 year of insurance and so many months of tax reserves. It will also be renewed for you each year after.

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  14. Penny says:

    Does my boyfriend have to be on my mortgage if he is going to live with me? I know his income counted towards them pre qualifying me but i really wany it to be only in my name.

    • Penny, thank you for your question. No, your boyfriend is NOT required to be on the application or mortgage with you. Additionally, his income will NOT be used for qualifying. It will just be your income and debt only. However, his income will be looked at just to insure the household does not exceed the set income limit for your county.

  15. Jackie Levy says:

    Will I be required to pay the USDA monthly mortgage insurance through the entire life of the loan? Or can I drop and cancel the USDA mortgage insurance once I pay down my mortgage to 80% ?

    • Thank you for the great question. USDA monthly mortgage insurance is paid through the life of the loan – 30 years, just like a FHA mortgage. However, homeowners that do accumulate enough equity (under 80% loan to value) can refinance into a conventional loan and drop the monthly PMI assuming they qualify for a conventional refinance at that time.

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  20. Great question. Yes, you can count them (along with yourself) towards the household number assuming you have primary custody of dependents.

  21. Robinson says:

    I can’t be on the loan with my husband but have lots of steady income. Can my income be used to determined how much loan we can afford? We also have land with a balance can that be added into the loan amount as well?

    • Thanks for your question. The answer is NO, your income cannot be used for qualifying unless you are listed on the loan application with your husband. However, your income WILL be including in insure the household does not exceed the USDA income limit for your county.

  22. Mike says:

    If someone took out a USDA loan to buy their home 3 years ago (and never refinanced) can they move out and rent the home with the USDA mortgage on it? They are buying a new home under a different loan program.

    • Hi Mike,
      Yes, they can as long as they are using a different mortgage program to purchase the next house. In addition, they would need to be able to qualify with the existing mortgage plus new mortgage. Also, there is a chance you may not be able to use the new rent payments to offset the current mortgage payment until that home has been rented for a certain about of time. Conventional loans recently changed their guidelines and require no wait – other loans may be require the home be rented for 2 years.

  23. Lesli Wallace says:

    Who sets up inspection for the house. The bank or buyer?

    • The appraisal inspection is always set up by the lender or bank. The home inspection is voluntary most the time and ordered/set up by the home buyer and their realtor. Home inspections aren’t always required, but always recommended since they provide “piece of mind” that you know what you are getting.

  24. Alely Ranada says:

    I had my home for about 4 years now, and theres is 4 of us in our usda home loan. How do i remove an applicant out of the usda home loan and what are the process of doing so? Do we need to recalculate the loans all over again with out the applicant that will be taken out?

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