USDA Home Loan Benefits
1. True 102% No Down Payment Home Loan (2% USDA funding fee included and rolled into loan)
The USDA home loan program requires no down payment and you may finance up to 102% of the appraised value. Since the end of down payment assistance programs in 2008, the USDA home loan program has become Florida's primary choice for 100% financing. The USDA loan program, along with the VA loan, is currently the only remaining 100% home mortgage programs here in Florida. You can move into your new home with little or no out of pocket expense. Please note, 100% financing is not mandatory with the USDA Rural Housing loan. Homebuyers can choose to put 3%, 5% or 10% down payment on their home if they like.
2. No Loan Amount Limits
The USDA home loan program will permit borrowers to finance what they can afford to pay based on the Florida USDA county income limits seen here. Unlike conventional or FHA loans, the USDA loan program does not have any official loan limits. The amount of the loan you receive will be directly related to your ability to repay the loan based on your qualifying debt to income ratios.
3. Low Mortgage Insurance (PMI)
As of October 2011, the USDA home loan program does require monthly mortgage insurance payments (PMI) like FHA loans and Conventional loans with less than 20% down payment. However, the monthly mortgage insurance factor with USDA is less and this saves home buyers money by reducing their monthly payments. Like all Government mortgage loans, the USDA Rural Development program has an upfront (one time) 2% guarantee fee that is rolled into the loan amount. As of October 2012, the current annual fee (PMI paid monthly) is .40% of the loan amount. This monthly mortgage insurance costs is three times less when compared to FHA loans. If you are already pre approved for an FHA mortgage, be sure to take a close look at the USDA mortgage as well. The monthly savings could be very significant.
4. No Credit Score Required
Unlike many home loans, the USDA Home Loan does not require a credit score. Instead, borrowers can qualify using other items such as rental history, insurance payments or utility bills to verify and build their credit worthiness. These are called "alternate" trade lines of credit, generally items not reported on your credit report. We can help you build the needed acceptable credit history. Please note – this is only acceptable for borrowers that do not have any active credit trade lines reporting on their credit report. Any borrower(s) that report a traditional credit score must be qualified based on their score, not based on alternate trade lines. The current minimum acceptable credit score is 640, please note this. This requirement does frequently change, so feel free to submit your information request form (on the right side of your screen) and ask for the latest credit requirements.
5. Seller Concessions Allowed
USDA does not have any rules regarding closing costs and who pays what portions. Some loans limit the amount of seller concessions (seller paid closing costs), not USDA. With the USDA home loan, buyers can move into their new home with no down payment and no closing costs. Please click this link here to learn more about USDA Rural Housing closing costs.
6. Florida Rural Areas Are Not Necessarily "Rural"
The USDA Rural Housing loan is guaranteed by the United States Department of Agriculture. Most people assume that the USDA home mortgage is only for farmers, ranchers or homes way out in the country. Not true, many homes in outlying suburbs of metropolitan areas are also eligible, you would be surprised. Even many locations right around Orlando, Tampa, Jacksonville, Ocala, Gainesville and Tallahassee FL are currently USDA eligible! We would be happy to talk to you about eligible areas in your town. Please note, existing mobile homes are NOT eligible for USDA financing.
100% USDA financing offers Florida residence the most affordable payment, less out of pocket cost, and the most competitive 30 year fixed interest rates available.
The below chart shows a $130,000 loan at 4% interest rate for a standard 30 year fix term. Real estate taxes and home owner's insurance figures have NOT been included, as this additional cost would be the same for all loans listed. Only principal, interest, and applicable monthly PMI and one-time guarantee fee have been included. The Conventional loan listed will NOT offer a comparable fixed rate (it will be HIGHER) This is the best "apples to apples" comparison.
- FHA (REQUIRED 3.5% MIN DOWN PAYMENT OF $4,550, 1.75% Funding Fee + CLOSING COSTS) = $740.00
- 5% CONVENTIONAL ($6,500 DOWN PAYMENT, NO funding fee + CLOSING COSTS) = $681.00
- USDA RURAL HOUSING 100% (WITH 2% GUARANTEE FEE, $0 DOWN PAYMENT) = $677.00
You can see above in this example the USDA loan option is over $60 per month cheaper when compared to the FHA loan option. This is mainly due to the cheaper monthly mortgage insurance. The savings amount would be even greater when compared to higher priced homes over $130,000. In addition, there is NO down payment required with the USDA Rural Hosing option saving home buyers thousands.
Please note all Government home loan programs (USDA, FHA, VA) serve a purpose. They are all safe and secure fix rate loans with no pre payments penalties. The FHA home loan is certainly a great choice for Florida home buyers living in more populated metro locations that are not USDA eligible, or households that make income over the USDA eligibility limits.
- USDA Loans require NO money down – up to 102% financing.
- Reduced monthly mortgage insurance costs (PMI) when compared to other loan options like FHA.
- USDA closing costs can often be included or rolled into the loan. Closing costs can also be paid by the seller up to 6%.
- There is NO maximum loan amount with USDA Rural Housing.
- You do NOT need assets to qualify for USDA loans.
- Qualifying for a USDA loan with lower credit scores is possible. *Current min required credit score is 640*
- USDA mortgages are secure 30 year fixed rate terms at low market interest rates.
- USDA loans are for ANY new & existing single family residence located in a Rural Development eligible area. Home being purchased can be a regular sale, short sale, foreclosure home, Bank owned, etc.
We are always happy to answer your questions about the Florida USDA Rural Housing application and lender pre approval requirements. To expedite your request quickly, please fill out the short information request form located on the upper right side of your screen → You can also call us 7 days a week/ 9am-8pm at 904-302-6060
Please take a moment to visit our USDA mortgage blog by clicking here for the latest 100% USDA home loan information and most frequently asked questions. Contact us today and see why USDA Mortgage Source is Florida's leading resource for all USDA RD home loans.
Are you looking for a home loan in a more populated (non rural) area of Florida? Please click to learn more about the Government backed FHA Home Loan. You can also click here to learn about all the other Florida mortgage options available.
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