USDA Loans In Florida
USDA Rural Development Loans offer Florida residents the opportunity to own a home with no down payment with a low fixed interest rate.
Table of Contents
Table of Contents
What is a USDA Loan?
A USDA loan is a zero-down lending solution supported by the U.S. Department of Agriculture. Aimed primarily at low- to moderate-income families, USDA loans make homeownership achievable for those residing in or relocating to rural areas of America.
These loans, part of the USDA Rural Development Guaranteed Housing Loan program, are an excellent option for potential homeowners on a tight budget. Unlike Florida conventional loans, which usually demand a minimum down payment of 20%, USDA loans don’t require any upfront money.
While there’s no down payment, homebuyers are still responsible for closing costs as well as guarantee fees. Consider a guarantee fee as similar to private mortgage insurance that safeguards the lender in case of loan default. The upfront guarantee fee is typically 1% of the loan amount, while the annual fees hover around 0.35% of the loan amount.
Current Florida USDA Mortgage Rates
The mortgage rates displayed on this website are for informational purposes only and are subject to change at any time without notice. Rates can vary based on various factors, including but not limited to, your creditworthiness, the loan-to-value ratio, and current market conditions.The displayed rates do not constitute a commitment to lend. To obtain an accurate and up-to-date mortgage rate quote, please contact The Wendy Thompson Lending Team directly. Our team of mortgage experts will provide you with personalized rates and terms based on your specific financial situation and loan requirements.
Florida USDA Loan Eligibility
Becoming eligible for a USDA loan in Florida involves meeting specific personal, property, and income requirements. Personal eligibility mainly entails being a U.S citizen, a non-citizen national, or a qualified alien. Additionally, applicants need to be at least 18 years old and legally capable of accepting the loan obligation.
Additional eligibility requirements include:
- The property you intend to buy should be in an area that is considered eligible by the USDA. This usually covers rural regions and some suburban zones.
- Your income should not go over the income limit set for your particular county and state by the USDA.
- A stable and dependable income is a must. This income should be more than enough to cover your monthly mortgage payments, other debts, and living expenses.
USDA Loan Requirements In Florida
Being eligible for a USDA loan in Florida is only part of the picture. To fully qualify, there are other requirements you need to adhere to:
Credit Score: A minimum credit score is specified by USDA home loans, though lenders might ask for a higher credit score than the USDA requirement for loan approval.
Stable Income: An important factor considered is your ability to make consistent monthly payments. Any indication of stable income over 24 months can be beneficial.
Payment History: Your record of prompt payments for rent or previous mortgages over the past 12 months can significantly affect your loan approval chances.
DTI Ratios: Lenders observe your Debt-to-Income (DTI) ratio, which is the percentage of gross monthly income used for monthly debt payments. The USDA stipulates two ratios. The first is 29% for housing-related debt, and the second is 41% for total debt.
Citizenship or Residency: Applicants must be U.S. citizens, U.S. non-citizen nationals, or Qualified Aliens.
How to Apply for a USDA Loan in Florida
The application process for a USDA loan can be compared to planting an orange tree in a Florida grove – with the right steps, you could have a prosperous outcome. Here’s how you do it:
Explore Your Options: Uncover whether you’re in an eligible rural area and ascertain your income eligibility.
Meet with a Lender: A USDA-approved lender can guide you through the process, helping you understand what to expect and how to plan accordingly.
Apply for a Loan Preapproval: A loan preapproval can give you an estimate of what you might be qualified to borrow and includes a credit check and other verifications.
Find a Home and Make an Offer: Once you’re preapproved, you can look for a suitable home that meets USDA property qualifications.
Home Appraisal and Loan Approval: After the offer is accepted, a home appraisal follows. If the home checks out and fulfills the USDA’s requirements, you could receive full loan approval.
Close on the Home: The final step is closing the deal. This involves signing documents at a scheduled closing meeting.
USDA vs FHA Loans
When it comes to USDA loans and FHA loans, it’s like comparing oranges and grapefruits—they might look similar at first glance, but there are some key differences.
Lower Down Payment with USDA
- USDA loans offer 0% down payment which can be a major selling point for many homebuyers.
- FHA loans, on the other hand, require a minimum down payment of 3.5%.
Mortgage Insurance
- Both loan types require mortgage insurance, but the cost can be lower with a USDA loan.
- FHA loans include an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP) which is paid monthly.
Income and Property Eligibility
- USDA loans are targeted toward low- to moderate-income families in rural areas. The property must be located in an eligible rural area as defined by the USDA.
- FHA loans are not restricted by geographic location and are accessible to all types of borrowers.
By understanding the differences between USDA and FHA loans, you can choose the mortgage that best suits your circumstances.
USDA Loan Closing Costs
Closing a USDA loan deal in Florida feels pretty much like finally catching the perfect wave. But to ride this wave, be aware of the closing costs that come with it:
- Appraisal Fees: An appraisal fee is paid to the appraiser who assesses the home’s market value.
- Origination Fee: This is charged by the lender for processing the new loan.
- Title Search and Insurance Fee: This covers the cost of researching the property’s records to make sure you’re receiving a “clean title.” Title insurance protects the lender (and optionally, the homeowner) from claims against the property that may arise from disputes over the title.
- Recording Fee: Paid to a city or county in exchange for recording the new land records.
- Discount Points: An optional, upfront payment to lower your interest rate.
Seller Paid Concessions
Just like deciding who will pick up the dinner bill after a friendly outing, in a real estate transaction, the buyer and the seller must determine who covers the closing costs. In some scenarios, sellers may agree to help with these costs, a practice known as ‘seller concessions.’
These concessions are agreements where the seller offers to absorb specific expenses related to the closure to help sell their property. This can be beneficial for both parties—buyers can save on the upfront money they need while sellers can attract more prospective buyers and facilitate quicker deals.
Seller concessions in a USDA loan may include:
- Closing Costs: These include appraisal fees, origination fees, title insurance, and recording fees. The seller can pay a portion or all of these costs.
- Prepaid Items: These are expenses that need payment at the time of purchasing but are related to a later date. They could include homeowner’s insurance or property taxes.
- Discount Points: If a buyer desires to lower the interest rate on the mortgage, they can opt to pay discount points. In a seller concession, the seller might decide to cover this expense.
Remember, while seller-paid concessions can be a fantastic way to reduce out-of-pocket expenses when buying a home, each loan type has rules about how much a seller can contribute. For USDA loans, a seller’s concession is typically capped at 6% of the home’s sale price.
Rolling Closing Costs Into The Loan
In some cases, you might feel like rolling the closing costs into your USDA loan, much like adding a side of fries to your main order. Here’s how it works:
With a USDA loan, it’s possible to fold the closing costs into the total loan amount. This means you’re essentially financing your closing costs, which leads to a higher total loan balance. Consequently, your monthly payment might increase slightly.
However, this option is contingent on the appraised value of the property being higher than the purchase price. In other words, this route is only available if the home is appraised at a value high enough to include the closing costs in the loan amount without exceeding the home’s value.
For instance, if you’re buying a home for $150,000 and the appraisal value comes in at $155,000, up to $5,000 of your closing costs could be included in your loan amount, assuming it allows for the fractions of a percent necessary to keep the loan within the appraised value.
Florida USDA Loan FAQ's
How do I qualify for a USDA loan in Florida?
Qualifying for a USDA loan in Florida involves several steps. These include meeting personal requirements such as being a U.S citizen, non-citizen national, or a qualified alien, being at least 18 years old and being in a position to legally take on a loan obligation. The desired property must be located in an eligible rural area, and your income should not exceed the current USDA designated thresholds for the county and state.
What credit score do you need for a USDA loan in Florida?
Typically, USDA loan programs require a minimum credit score of 640. However, this can vary based on the specific lender and details of the loan.
How long does it take the USDA to approve a loan?
The USDA loan approval process typically takes between 30 to 60 days. However, the exact timeframe can vary based on various factors such as loan volume, borrower cooperation, and USDA staff workload among others.
How to Choose A USDA Mortgage Lender in Florida
While both loans help you buy a home, they have some differences. FHA loans often require smaller down payments and are more forgiving of lower credit scores but come with mandatory insurance premiums. Conventional loans usually need higher down payments but might not require mortgage insurance.
Choosing a USDA mortgage lender in Florida is like choosing the right sunscreen - it's crucial for protection. Look for a lender that is USDA-approved, has a good reputation, offers low interest rates, provides excellent customer service, and is able to guide you smoothly through the loan process.
While some lenders might be popular and have catchy commercials, they might not provide the best service or rates. Shop around, make calls and ask the right questions before making a choice. Remember, the right lender can make a difference in your homeownership journey.
When can you refinance an FHA loan?
There's no waiting period to refinance an FHA loan. This action usually depends on when it makes financial sense for you, such as when interest rates drop significantly.
When can you drop PMI on an FHA loan?
When can you drop PMI on an FHA loan?
For FHA loans, the Mortgage Insurance Premium (MIP) cannot typically be dropped or canceled unless you refinance to a non-FHA mortgage.
Can I get down payment assistance with an FHA loan?
Yes, you can. FHA loans allow for down payment gifts from family members, employers, or charitable organizations. There are also various state and local government assistance programs available to help.
How many FHA loans can I have at one time?
Typically, FHA only allows borrowers to have one FHA loan at a time. Exceptions exist for certain circumstances such as changes in family size, job relocation, or instances where a co-borrower is no longer living in the property.