USDA Rural Housing 502 Guarantee loans are becoming very popular these days for homebuyers purchasing in Lake and Volusia County. Mainly for the fact that 100% mortgage financing is getting harder and harder to find. In fact USDA and VA are the only two mortgage programs today that permit 100% financing. This USDA loan, also know as USDA 502 Guarantee loan, or Rural Development loan is administered by the United States Department of Agriculture and helps buyers in Florida’s more rural locations like Clermont and Leesburg purchase homes with little to no down payment. The USDA mortgage is one of the most cost effective home buying programs in the Florida today. Since its inception in 1949, the USDA Rural Development loan has helped over 1 million home buyers obtain housing with little or no money down. The USDA mortgage loan has transformed from a relatively unknown government mortgage program just a few years ago to a leading home loan option today, especially for first time home owners.
What does a prospective homebuyer need to do to get qualified for a USDA home loan?
Similar to other loan programs like FHA, and VA, rural housing loans aren’t made by the USDA. Instead, the USDA guarantees mortgage lenders making USDA loans against loss. The program is meant to spur homeownership in rural and underdeveloped areas. In order to qualify for a USDA mortgage home buyers must meet two primary requirements:
First, the buyer must buy a home in a USDA approved “eligible” area. In general, USDA property map eligibility is governed by census tract density. Please click here to see the USDA housing map. All of Lake County is eligible for the program, and most of Volusia County! A buyer’s second USDA eligibility requirement is that household income may not exceed 115% of the area’s median income. Buyers can see all the USDA income limits here. If you aren’t sure about your income and how to calculate in regards to eligibility, please contact us. If you would like to start your USDA loan application, 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 7 days a week at ph: 800-743-7556
There are other USDA eligibility criteria that homebuyers will want to know:
- The house to be purchased must be a primary residence – no investment or vacation homes
- The buyer must be at least 2 years complete from a bankruptcy. 4 years from foreclosure.
- The buyer must have decent credit, most USDA lenders require a min 620 credit score.
- The buyer must meet a qualifying debt-to-income ratio of 29 percent limit for housing costs; and 42 percent for total debt
Some of these guidelines are flexible like the debt to income ratios for example. Buyers that have very strong credit for example (over 680) may be able to exceed the debt ratios limits a bit. Buyers are evaluating on the overall strength of their USDA loan application.
What makes the RD USDA mortgage a good option?
100% financing makes USDA loans among the most desirable mortgage programs still in existence. The only other programs out there that offer this in FL today are VA loans Even better than just no down payment, going this route means the possibility of rolling in closing costs or use grants and gift funds, something most other programs won’t allow borrowers to do.
USDA will permit home seller(s) to pay buyers closing costs, up to 6%. This is great because many buyers won’t need any out of pocket cash. Homebuyers could ask their seller to pay all their closing costs and pre paid tax/insurance escrows.
No savings or reserves. The buyers are not required to have seasoned funds or a certain amount of bank savings.
Not limited to first time buyers. The only restriction is that buyers using USDA financing cannot own a suitable property in the local commuting area.
No length of title seasoning. Many programs require that the seller of the property own the home for 3 to 6 months or longer. There are no title requirements for USDA loans.
Low mortgage insurance. The monthly mortgage insurance or “PMI” with USDA loans is pretty cheap, in fact it’s twice as less as FHA loans.
Some USDA Q&A :
What is Considered a Rural Area by the USDA?
Rural areas include open country and places with population of 10,000 or less and—under certain conditions—towns and cities. There is an automated rural area eligibility calculator for USDA Home Loans at: http://eligibility.sc.egov.usda.gov
What is the Maximum Loan Amount for a USDA Loan?
There is no maximum loan amount for a USDA Rural Development Mortgage. However, it is limited by the appraised value and repayment ability (determined by your household income).
What is the Maximum Loan to Value for a Rural Housing Loan?
The maximum USDA Rural Development Loan To Value (LTV) can be up to 100% LTV plus the Agency guarantee fee of 2%
Can Closing Costs be Financed into the Loan?
Yes, any difference between the contract price and the appraisal value can be used to finance normal closing costs for a USDA Rural Development Loan.
Read all the most commonly asked USDA FAQ’s here.
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 at 7 days a week at ph: 800-743-7556
Serving all Florida homebuyers: Including those in Lake & Voluisa County – Astor, Clermont, Eustis, Forest Hills, Fruitland Park, Grand Island, Groveland, Howey-In-The-Hills, Lady Lake, Leesburg, Mascotte, Minneola, Montverde, Mount Dora, Mount Plymouth, Sorrento, Tavares. Daytona Beach, DeBary, DeLand, Deltona, Edgewater, Holly Hill, Orange City, Ormond Beach, Port Orange FL. USDA Housing, Great For Lake- Volusia County