Many first-time buyers in Florida are still unaware that the USDA (United States Department of Agriculture) offers 100% home loans in select areas in Florida. The good news is many homes in suburban locations around Florida can be purchased with a 100% USDA mortgage.
Even locations just outside of Orlando like Winter Garden, Apopka, Ocoee, Kissimmee, Clermont, and many areas of Osceola & Lake County, still have approved locations in 2023. The USDA mortgage provides low-cost government-backed home loans that suit a variety of options. The program is especially great for Florida first time homeowners that have little to no cash savings for a large down payment.
So what type of mortgages does RD USDA offer?
Currently, there are two kinds of USDA loan programs available for single-family households:
USDA 502 Guaranteed Rural Development Loans:
USDA 502 Guaranteed loans are the most common type of USDA loan and allow for higher income limits. The 502 USDA loans are processed and underwritten only by approved USDA lenders in Florida. USDA Guaranteed loan applicants may have an income of up to 115% of the median household income for the area. Income limits in Florida start at $110,650 for a household of 1-4. See all the current USDA income limits here. All USDA guaranteed loans carry 30-year terms and are set at a fixed rate, no adjustable rate terms.
Most home buyers will fall under the 502 Guarantee loan. Contact us today if are a home buyer that wants to start a USDA 502 Guaranteed loan application.
USDA Direct Rural Development Loans:
USDA Direct mortgages are only offered and underwritten directly by the USDA. These loans are less common than USDA mortgage Guarantee and are only available for low and very low-income households to obtain home ownership, as defined by the USDA income eligibility requirements. Very low income is defined as below 50 percent of the area median income; low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to see the area income limits for this program.
Orlando Area USDA Mortgage Guidelines for 2023:
- Currently a min 620 credit score is required by most lenders and banks to get approved.
- The home being purchased must be located in a USDA-approved area. See the map here.
- Household income (the entire family) must be below the income limit per county. Orange, Seminole, Osceola, and Lake County are the same.
- USDA permits the home seller to pay buyer closing costs and pre-paid escrow items like taxes, and insurance.
- USDA mortgages do not have a set loan amount limit. The home buyer qualifies based on their debt-to-income ratios. The current debt-to-income ratio limit is 29/42. This can be exceeded in some cases with strong compensating factors like great credit, great job history, assets, etc.
Like most loans that require less than 20% down payment (FHA, conventional) the USDA mortgage program will require an upfront guarantee fee and mortgage insurance or PMI. Effective 2023, USDA mortgage insurance rates (PMI) are:
- For purchases and refinance programs – a 1.00% upfront guarantee fee is paid at closing, based on the loan size. The guarantee fee is allowed to roll into the borrower’s loan amount. So you can finance up to 101%
- For all loans, a 0.35% annual fee, is based on the remaining principal balance. This is the monthly premium added to the buyer’s payment each month – like taxes and home insurance.
Example: $200,000 loan size in Winter Garden Florida would require a $2,000 guarantee fee (rolled into the loan) and approx $58.33 of mortgage insurance paid monthly.
Some interesting facts about the USDA RD home:
- USDA Rural Housing loans are 30 year fixed rate mortgages – secure and backed by the US Government.
- Rural Development loans also have very competitive low-interest rates
- USDA loans do not have pre-payment penalties
- The USDA loans do not require a down payment – 100% financing
- USDA DOES have monthly mortgage insurance, but the monthly amount is significantly less when compared to the FHA mortgage.
USDA Mortgage Source serves all of Orange County, Lake County, Osceola County, and Seminole County – Winter Garden, Orlando, Kissimmee, St Cloud, Apopka, Ocoee, Clermont.
Questions? just submit the short Info Request Form on this page for quick service. You can also contact us 7 days a week at Ph: 800-743-7556
Home buyers looking to purchase in more populated locations ( not USDA approved) closer to Orlando (Doctor Phillips, Lake Buena Vista, Maitland, Windermere, Winter Park, Altamonte Springs, Casselberry, Longwood) please contact us to discuss other low down payment mortgage solutions available in these locations.