There is often times a bit of confusion about what Florida USDA loan new home buyers should use. After all, there are two different USDA home purchase loan programs-the regular USDA Direct loan and the 502 Guaranteed loan program. Below, we will discuss the two programs so you can pick which one is right for you.
USDA Direct Program:
Also known as the Section 502 Direct Loan Program, this program assists low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.
Who may apply for USDA Direct loan?
A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house. They also they must demonstrate a willingness and ability to repay debt.
Applicants must:
- Be without decent, safe and sanitary housing
- Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet
- Agree to occupy the property as your primary residence
- Have the legal capacity to incur a loan obligation
- Meet citizenship or eligible non-citizen requirements
- Not be suspended or debarred from participation in federal programs
Properties financed with direct loan funds must:
- Be modest in size for the area
- Not have market value in excess of the applicable area loan limit
- Not have in-ground swimming pools
- Not be designed for income producing activities
USDA Direct program in a nutshell:
The USDA Direct program is designed for very low to low income households. The program is processed in house directly by USDA Rural Housing. In addition, this program will take longer than the 502 Guaranteed program. Home buyers that wish to apply for the USDA direct program can click here to learn more.
USDA 502 Guaranteed Program:
This program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural home buyers.
Who may apply for this program?
Applicants who:
- Meet income-eligibility
- Agree to personally occupy the dwelling as their primary residence
- Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien
- Have the legal capacity to incur the loan obligation
- Have not been suspended or debarred from participation in federal programs
- Demonstrate the willingness to meet credit obligations in a timely manner
- Purchase a property that meets all program criteria
What is an eligible area?
Check eligible addresses for the loan guarantees.
USDA 502 Guaranteed program in a nutshell.
The USDA Guaranteed program is very similar to the Direct program with a few acceptations. First, the program allows for higher household income. Over $112,450 for a family of 1-4 in most locations in 2025. See all current USDA income limits here. Second, the 502 Guaranteed program is processed only by approved USDA lenders, not the actual USDA office. Also, the timeline for application and closing often times faster. The 502 Guaranteed program accounts for most of the USDA loans closed in Florida.
Home buyers interested in applying for the 502 Guaranteed program can visit our USDA info page here We are available to assist you 7 days a week. To get started, please submit the “Request Contact” button at the top of this page.