USDA Home Loans
If you’ve never heard of USDA Home Loans, also known as Rural Housing Loans or Section 502 Loans (named for their place in the USDA charter), you are not alone!
USDA loans are backed by the US Department of Agriculture and, when borrowers meet the income requirements, can be a great home financing option. In fact, you may be surprised to find USDA mortgages with lower rates than other government-backed mortgages, such as FHA mortgages and VA home loans, as well as conventional Fannie Mae and Freddie Mac mortgages.
But don’t be put off by the term “rural.” In the USDA Home Loan program, the home under consideration must be located in a “rural” area, however, the USDA has a very loose definition of this. Many small towns meet their requirements, but many suburban areas are eligible as well.
The Core Mortgage Team specializes in the area of USDA mortgages in Florida, with licensed loan originators who understand the complexities of the program. We make the USDA loan process fast and easy to understand.
Call the Core Mortgage Team today at (855) 554-CORE or (239) 431-5889 to find out if you qualify for USDA Home Loans and the benefits that come along with them.
USDA Mortgage Basics
To qualify for USDA, borrowers must typically live in small towns—often rural, but not necessarily—and have enough income to pay the mortgage, but not too much income. They are available to first-time and repeat home buyers.
Primary residences in almost every area of Florida, outside of the major metropolitan areas, can be purchased with USDA home loans, including homes in Fort Myers, Naples, Marco Island, Bonita Springs, and many other Florida locations.
- Loan Income Limits – USDA loans are designed to promote homeownership in households with “modest means” only. Consequently, the agency will not guarantee mortgages that exceed its maximum income limits, which vary by area and size of household. Income limits in Florida currently start at $74,750 for 1-4 member households and $98,650 for 5-8 member households for USDA Guaranteed Loans. USDA Direct Loans have lower maximum income limits.
- 100% Financing – Most other home mortgage programs require at least a small down payment ranging from 3% to 20% or more of the home’s purchase price. USDA mortgages allow borrowers to finance 100% of the price of the home with no money down. The USDA also allows the seller of the property to pay the closing costs for the buyer.
- Credit Requirements – In general, borrowers should have a credit score of at least 640 and have no late housing payments for at least one year. At least three years must have passed since a foreclosure or Chapter 7 bankruptcy. Applicants must also have dependable two-year employment histories and meet the USDA debt-to-income requirements.
- Mortgage Insurance Premiums – USDA loan fees are very competitive when compared to other low down payment programs. Borrowers will be required, however, to pay two fees. The Up Front Guarantee, which equals 2% of the proposed loan amount, can be added to the loan balance to be paid over time. The Annual Fee, which acts just like monthly mortgage insurance, is 0.50% per year and is also paid as part of the monthly mortgage payment. This premium is about 70% lower than the Mortgage Insurance Premium charged for comparable FHA loans.
All USDA guaranteed loans are fixed-rate mortgages; there are no adjustable rate terms available. In addition to traditional single-family homes and condos, these loans can also be used to help purchase manufactured and modular homes.
The Core Mortgage Team can help you learn more about USDA home loans in Florida, find out if you qualify, and avoid the red tape and bureaucratic hassles that often come along with government loan programs.
We are dedicated to meeting the home financing needs of all Florida home buyers. Call us 24/7 at (855) 554-CORE or (239) 431-5889 to find out more.
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