First-time home buyers around Lee-Collier County can still purchase a home with 100% financing thanks to the USDA 502 Guaranteed program. The USDA 502 loan is government-backed program offered by the Department of Rural Housing and has many advantages for first-time buyers around Naples, Fort Myers, Cape Coral, etc.
Many locations in southwest Florida are still eligible for this no money down mortgage program including Collier County and many parts of eastern Lee County. The USDA loan has many advantages for buyers that have limited cash saved up for down payment. Let’s take a look at some benefits of USDA financing below. If you have questions, please reach out to us by calling ph: 800-743-7556
USDA RD loan advantages for Naples first-time home buyers:
- USDA is the only mortgage program today that allows residents in Collier /Lee County home buyers to purchase with no down payment. Unless you have VA loan eligibility, USDA is the only option.
- 100% financing, plus USDA allows for buyers to get their closing costs paid by the home seller or added into their loan under certain cases depending on the appraisal.
- The USDA home inspection and appraisal requirements are the same as the other loan programs today like FHA, Conventional – no special requirements.
- Home buyers are NOT required to have a certain amount of savings in the bank.
- Secure 30 year fix terms at low-interest rates with no early pay off penalty worries.
- USDA loan applicants are NOT required to be first time home buyers. You can be a move up or second-time buyer.
- No USDA loan purchase limits – home buyers qualify based on their income and debt to income ratios.
- Decreased monthly mortgage insurance. USDA requires monthly mortgage insurance costs each month like most home loans when the buyer is putting down less than 20 percent down payment. The benefit with USDA is the monthly PMI costs is much less when compared to other home loans like FHA, etc.
- Starting the process for a USDA loan doesn’t require any special class or down payment assistance. Buyers can get pre-approved in under 20 min.
Critical USDA loan eligibility and pre-approval requirements:
- The property to be purchased must be located in a USDA Rural defined approved area in Florida. In addition, the USDA program has income limits for the household.
- Buyers that have student loan debt – Student loan debt is not deferred when qualifying for a USDA loan. Because of this, USDA loan applicants with significant student loan debt could encounter obstacles in regard to debt-to-income ratio limits.
- Closing time frame – The USDA loan program is unique because the loan files are processed in two steps. First by the mortgage company, bank or broker originating the loan, then the file goes through a final review at the local USDA Florida office. This means that USDA loans will take an additional week to close when compared to other loans. Please note: USDA 502 Guaranteed loans can only be processed by approved mortgage companies, not directly by the USDA. USDA only processes its “Direct” loan in house. This program is set aside strictly for very low-income, subsidized housing.
Florida USDA Home Loan Eligibility:
The USDA mortgage has a few important eligibility requirements that must be met in order to use the program. Let’s take a closer look below.
- The location of the house: The house you decide to purchase must be located in a select rural approved area according to the USDA property map here. You can input the property address and check to see if the house resides in an eligible location. The home can be any single-family, townhome and select FHA-approved condo. Mobile homes and manufactured homes are not allowed. If you need assistance finding USDA approved homes in your area, please contact us below. If your area is not eligible, please contact us to discuss other financing alternatives.
- Your household income: The USDA Rural Development mortgage has income limits or “caps” in place. More importantly, the income caps apply to all income producers living in the house, even if they are NOT listed on the loan application. USDA limits vary based on the number of members living in the household, number of dependents, elderly and Florida county. Contact us below to discuss this in detail.
Basic Florida USDA Loan Application Requirements:
USDA loans really aren’t that much different than other home loans like FHA, VA, etc. USDA has standard qualifying guidelines that must be met. Let’s discuss the latest USDA guidelines below:
- Credit Fico Score – USDA lenders will want to see applicants have a 620 or greater credit score to be approved. However, a 620 credit score does not guarantee loan approved. All mortgage companies have additional requirements in place for applicants that have experienced past financial hardship like foreclosure, short sale or bankruptcy. These are called “overlays” For Example – if you have a 715 credit score but had a foreclosure 2 years ago, you would likely need to wait a few more years.
- Debt Ratios – Like all other home loan programs, USDA has debt-to-income ratio limits. Borrowers can read more about this under the USDA eligibility section.
- A copy of the borrower’s bank statements will be needed during the approval process. Although USDA does not require a certain amount of savings, applicants will want to ensure they can document any deposit out of the ordinary. Normal weekly, bi-weekly or monthly payroll deposits are normal and to be expected. However, random deposits will be documented with a copy of the check, and deposit slip. Gift funds are allowed with USDA loans, just be sure to keep a proper paper trail when it comes time to document. Additionally, the gift donor may be required to provide their bank statements as well. These requirements are not exclusive to USDA loans, they are essentially required on all government loans today.
- Employment History- Two years of stable income will likely be needed. You are not required to have the same job for two years, just a stable history. Example: Let’s say you have been working as a fireman for 3 years. You recently left one fire department and started working at another. In addition, you took a few weeks off between jobs. This is fine. Or maybe you needed to take 3 weeks for hardship reasons – this likely would be okay as well. Recent graduates are the exception to this rule as they do not need a solid two-year job history. Self-employed borrowers will need two years of tax returns. Any part-time jobs will need two years of stable history to be included.
USDA Mortgage Source is Naples’s leading source for USDA loans. Buyers that have questions or want to learn about getting qualified can call 800-743-7556 seven days a week. For a quick response, please submit the Info Request form located on this page.
Serving USDA homebuyers across Fla – including Lee & Collier County: Everglades City, Golden Gate, Immokalee, Marco, Marco Island, Naples, Naples Manor, Naples Park, North Naples, Ochopee, Palm River Estates. Boca Grande, Bokeelia, Bonita Springs, Captiva, Cape Coral, Estero, Gateway, Lehigh Acres, Fort Myers, Page Park, Punta Rassa, Sanibel, San Carlos Park, St. James City