Did you know that USDA (US Department of Agriculture) backed by the U.S. government, offers home loans, just like to FHA and VA loans?
Oh…and the best part is these USDA mortgages are 100% financing and do not require a down payment. Yes, believe it.. 100% home financing is still alive in Florida even in 2014. The USDA Rural Housing loan was originally designed to help rural Americans realize the dream of homeownership, these mortgages can also be used to finance a wide array of single-family homes. A USDA loan can be used to purchase or refinance any home located in a qualified area. What many home buyers don’t realize is that these guaranteed loans offer 100 percent financing to qualified borrowers.
Why a Florida USDA Home Loan Should be Your First Choice
There are many advantages to choosing a FL USDA backed mortgage. One hundred percent financing makes these loans among the most desirable of loan programs still in existence. The only other programs out there that offer 100% no money down today is the VA loans for military borrowers. Even better than just $0 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. The right, USDA will allow the home seller to pay the buyers closing costs. In addition, buyers may even qualify using “non-traditional” credit and you don’t have to have amazing credit to get approved either. You should have at least a 620 credit score, but you may be able to use credit references like cell phone, cable tv, insurance and utility bills to build out your credit if you don’t have very much of it. Plus, USDA loan interest rates are some of the best around and often better than conventional and FHA mortgage rates, especially when you factor in the LOW monthly mortgage insurance costs. In fact the USDA loan has monthly mortgage insurance that is 4 times lower to FHA loans!
So what’s the catch with USDA loans, sounds too good to be true?
Of course, there are a couple of catches to getting a loan like this:
- Income eligibility is capped at 115 percent of your median area income. To check your eligibility, use the income eligibility calculator at the USDA website. Most of the income limits in FL start at 74,000 +. However, this can vary from county to county. The income limits also go much higher for household over 4 members. Keep in mind that the income limits apply to everyone living under the same roof, even if they are not on the USDA loan application.
- These are strictly plan old 30-year fixed rate loans. No exotic adjustable rate options with USDA loans.
- You must be able to qualify with maximum debt-to-income ratios of 29/41. This can sometimes be a little higher based on strong compensating factory like great credit score, savings, etc. To determine if you qualify, add the loan principle, taxes, insurance and interest and divide the sum by your gross monthly income. If this calculates to 29 percent or lower, you qualify. Additionally, your total debt, divided by your gross monthly income must be equal to or less than 41 percent.
- You must be at least two years out of a bankruptcy discharge and be “credit worthy.” In addition, a 620 credit score is required by most lenders in 2015.
- The property must be in an approved rural area. 80% of Florida is eligible, so be sure to check the USDA approved map located here
- You cannot own another home within commuting distance of the home you wish to purchase.
Comparing USDA Mortgages to Other Common Mortgage Options:
- Unless you want to put down a lot of money on a home, USDA beats out conventional financing and even requires less money out of pocket than FHA which currently requires 3.5% down payment. So you have savings for a down payment ? Even if you still have 3%, 5%, etc, for a down payment, buyers should look close at the USDA loan due to reduced mortgage insurance. Please click here to read about the USDA and FHA differences.
- USDA may also be a great option for military veterans who have used their VA loan eligibility options, and face higher fees as a result.
Home buyers looking for the latest USDA RD mortgage loan information should visit www.usdamortgagesource.com or call 800-743-7556
Buyers located outside the rural eligible locations should look at the FHA loan at www.fhamortgagesource.com
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