When most people think of USDA Rural Housing loans, they think “farm loans” only to be used to purchase homes way out in the country. That is not the case with today’s USDA home loan. In fact, properties in almost every area of the Florida’s major metropolitan areas can be purchased with the 100% USDA loan today. Even locations just outside of Jacksonville like Orange Park, St. Johns, Middleburg, Callahan, Yulee, World Golf, St. Augustine, etc. A USDA loan provides low-cost government insured home mortgage loans that suit a variety of options. The program is especially great for Florida first time home owners that have little to no cash savings for a large down payment.
So what type of mortgages does RD USDA offer?
Currently, there are two kinds of USDA loan programs available for single family households:
USDA 502 Guaranteed loans are the most common type of USDA loan and allow for higher income limits. USDA Guaranteed loan applicants may have an income of up to 115% of the median household income for the area. Income limits in Florida start at $74,750. Florida county income limits for the USDA Rural Development program can be viewed here. Most home buyers will fall under the 502 Guarantee loan and the guarantee program is offered by only USDA approved lenders and banks.
All USDA guaranteed loans carry 30 year terms and are set at a fixed rate, no adjustable rate terms.
USDA Direct Rural Development Loans:
USDA Direct mortgages are only offered and underwritten directly by the USDA. These loans are less common than USDA mortgage Guarantee and are only available for low and very low income households to obtain home ownership, as defined by the USDA income eligibility requirements. Very low income is defined as below 50 percent of the area median income; low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to see area income limits for this program.
USDA Home Mortgage Guidelines for 2015:
- Currently a min 620 credit score is required by most FL lenders and banks to get approved.
- The home being purchased must be located in a USDA approved area. See the map here.
- Household income must be below the income limit per county – please read here.
- USDA permits the home seller to pay buyer closing costs and pre paid escrow items like taxes, insurance.
- USDA mortgages do not have a set loan amount limit. The home buyer qualifies based on their debt to income ratios. The current debt to income ratio limits is 29/42. This can be exceeded in some cases with strong compensating factors like great credit, great job history, assets, etc.
Like most loans that require less than 20% down payment ( FHA, conventional) the USDA mortgage program will require an upfront guarantee fee and mortgage insurance or PMI. Effective October 1, 2014 USDA mortgage insurance rates (PMI) are:
- For purchases and refinance programs – 2.00% upfront guarantee fee paid at closing, based on the loan size. The guarantee fee is allowed to roll into the borrowers loan amount. So you can finance up to 102%
- For all loans, 0.50% annual fee, based on the remaining principal balance. This the monthly premium added to the buyers payment each month – like taxes and home insurance.
Example: $100,000 loan size in Middleburg Florida would require a $2,000 guarantee fee (rolled into the loan) and $41.67 of mortgage insurance paid monthly.
Here are a few interesting facts about the USDA RD home :
- USDA 100% Home Loan Financing are 30 year fixed rate mortgages
- USDA 100% Home Loan Financing has very competitive interest rates
- USDA 100% Home Loan Financing does not have pre-payment penalties
- USDA 100% Home Loan Financing does not require a down payment
- USDA 100% Home Loan Financing DOES have monthly mortgage insurance, but the monthly amount is 3 times less when compared to the FHA home loan.
Florida homebuyers that have questions, let us help! We are ready to assist you 7 days a week. For fast service please submit the “Request Contact” form at the top right side of your screen. Mobile users can find the short Request Contact Form here. Be sure to also visit www.FiveStarsMortgage.com for the latest mortgage info.
Five Stars serves all of NE Florida including 2015: Clay County, St. Johns and Nassau County, Green Cove Springs, Keystone Heights, Middleburg, Orange Park, Penney Farms. Crescent Beach, Elkton, Fort Matanzas, Fruit Cove, Hastings, Orangedale, Palm Valley, Ponte Vedra, Ponte Vedra Beach, St. Augustine, St. Augustine Beach, Switzerland, Vilano Beach. Amelia Island, Bryceville, Callahan, Fernandina Beach, Hilliard, Yulee FLA