USDA still provides 100% financing home loans in many parts of Florida. Many homebuyers are surprised to learn exactly what locations are still considered rural eligible. There are even select locations just outside of the major cities like Jacksonville, Tampa, Orlando, Tallahassee, Ocala and Gainesville still qualify for USDA financing today.
USDA home financing is a perfect solution for Fla first time home buyers that want to purchase their first home, but have limited down payment money to do so. Below we will look at the USDA loan benefits for home buyers.
- NO Down Payment – Unlike most other types of mortgage financing, USDA mortgages require no down-payment which makes it easier for first-time home buyers to own homes.
- Low Monthly Mortgage Insurance – Monthly PMI is much less when compared to other FHA and conventional loan programs. In fact, the monthly mortgage insurance is almost half as less as the FHA loan.
- Lower Credit Scores Possible – because USDA 502 guaranteed loans are backed by the government, those with “less than perfect” credit borrowers have an easier time getting approved for a USDA loan. The program generally requires a min 600-620 score for home buyers that are financing 100%. Home buyers with lower credit scores can also be approved with 5-10% down payment.
- Low 30 Year Fixed Interest Rates – Since Rural Housing guarantees these loans against default, therefore USDA loans usually have better interest rates than most conventional mortgage loans. Also since they are guaranteed by the federal government, lenders are more likely to offer the program. The USDA program is a standard 30-year fixed mortgage with no early payoff penalty.
USDA rural housing does have a few eligibility requirements, and understanding these requirements is very important. USDA household income and property location are the two keys. It is a good idea to find out the eligibility based on your household income and the location of the home you are planning on buying or refinancing.
We encourage any home buyers that have questions to call us at 800-743-7556 or just submit the Info Request Form on this page.
The USDA home loan has many different names. It is often called the USDA Rural Mortgage, Rural Development or “RD” loan, 502 Guaranteed Home Loan, etc. All USDA 502 loans are offered through approved USDA lenders only. Of course, $0 down payment is the main draw to USDA financing and even today it remains one of the only no money down loan program in Fla. We will go over the most important USDA loan requirements below.
Rural Housing Mortgage Eligibility
Some qualifying requirements include:
- Have an adjusted annual household income that does not exceed the moderate income limit established for the area, see the link above. A family’s income includes the total gross income of the applicant, co-applicant and any other adults in the household – this does include household occupants that are not listed on the loan application. Applicants may be eligible to make certain adjustments to gross income— such as annual childcare expenses, disability, minor children in order to qualify. Please click here for the USDA income calculator.
- Buyers should have a credit history that indicates a reasonable willingness to meet obligations as due. 620 min credit score ( 600 scores can be done with strong compensating factors like low debt, higher savings)
- Have repayment ability based on the following debt to income ratios: Housing debt cannot exceed 30%. Total monthly obligations with housing / gross monthly income should often times be under 42%.
- Have an adequate and dependable income, two-year job history is often needed.
- Be a U.S. citizen, qualified alien, or be legally admitted to the United States for permanent residence.
USDA Approved Homes, Eligibility:
You’d be surprised as to what homes are in USDA eligible areas. Reach out to us if you would like to discuss the USDA approved area around your town. Typically towns on the outskirts of larger cities and less than 30,000 residents apply, however you would be surprised where the areas are. Please click this link Property Eligibility and begin your search. If you have any questions, please contact us below.
- 502 Guaranteed loans can be made on either new or existing homes; Existing homes must be structurally sound, functionally adequate, and in good repair. There are no restrictions on the size or design of the home financed.
- The home must a primary residence – no investor home purchase. Property cannot be income-producing (Large Acerage, Farm, Cattle Ranch, etc)
- Homes must be located in rural areas, check the map above. The seller of the home is not important, only where the property is located.
USDA Loan Program Highlights:
- Loans may be for up to 100 percent (101% LTV if the 1.0 % guarantee fee is included in the loan) of appraised value or for the acquisition cost, whichever is less.
- 100% financing.
- Mortgages are safe and secure 30-year fixed rate at market interest rates.
- Loans may include funds for closing costs, the guarantee fee, escrow account and other prepaid items, if the appraised value is higher than the sales price. Sellers may pay the buyer’s closing costs as well.
- Home buyers can make an application with approved Florida USDA lenders. Please contact us if you would like to begin the process.
If you need assistance or want to learn more, please reach out to us. For quick service please submit the Info Request Form on this page, or call the number above.