How many residents of Florida (or anywhere else in the country, for that matter!) know that the United States Department of Agriculture backs a guaranteed home loan program that allows rural residents to qualify for home loans if they’re unable to do so by conventional means? And how many residents of New Tampa, Wesley Chapel, and Land O’ Lakes know that this loan is available in these locations?

Most people who do know about the USDA loan program think that it’s strictly limited to highly rural areas, but in fact, it’s available in many locations that are commonly thought of as much more suburban. Programs such as these aren’t often well-known to the general public, but given that this one’s available in Land O’ Lakes, New Tampa, and Wesley Chapel it’s definitely in your best interests to learn more about it if you are interested in living in one of those areas. The USDA guaranteed home loan program is a fantastic opportunity that makes it easier for moderate income families to afford their own home.

Main Benefits to Homeowners

Moderate income families living in these Florida locations can really benefit from this program. The main benefit is that you don’t need a down payment, and in fact this is one of the major intentions of the program. The idea is that families who could otherwise afford the mortgage, but who don’t have a large enough down payment, can get into their own home without having to wait and save more. The loans offered by the program are thirty year fixed rate mortgages that provide the following benefits:

• Credit score requirements are more flexible
• No predetermined maximum loan amount (loan amount based on income criteria, your repayment ability, and the home’s value)
• No need for a down payment
• You can include the cost of home improvements and repairs in the loan
• No restrictions on lender
• No need to purchase monthly mortgage insurance (so your mortgage repayments will cost a little less each month)
• No limit on gifted funds
• The loan is guaranteed

Eligibility Criteria

To be eligible for one of these USDA home loans, you must meet the following criteria:

• The property needs to be in an eligible location
• Be purchasing residential property
• Must not already own a home in the local area (the exception is if your existing home is either functionally inadequate or structurally unsound)
• Be unable to qualify for conventional financing (this doesn’t include FHA or VA)
• Be a US citizen
• Have the legal capacity to receive a loan
• Intend to occupy the new home permanently (meaning it can’t be a second home or vacation home)

Credit and Financial Requirements

There are some financial and credit requirements, too. First of all, applicants with a credit score higher than 660 are preferred. You can still apply if your score is lower than that, however. If your score is lower than 620, there are some additional qualifying criteria. You can not have:

• Undergone bankruptcy discharge or foreclosure within the past 36 months.
• Been more than 30 days late on consumer debts, had any accounts converted to collections, any outstanding judgments, or two or more late rent payments, within the past 12 months.
• Tax liens or delinquent government debts (student loans are included).
• Any outstanding collection amounts.

There are also some income limits, and some requirements that focus on your ability to repay the loan. To qualify, your income must be within 115% of the US median income. There are some deductions available, including costs of daycare and care costs for elderly family members and other dependents.

In addition, your monthly house payment, taxes, and insurance total should be less than or equal to 29% of your gross monthly income. Your total monthly debt, including any other debts as well as the house-related debts, should be equal to or less than 41% of your gross monthly income.

For homes built after January 2001, this ratio can be expanded to 31%-43%.

What can you do with a USDA Home Loan?

The loan can be used for a pretty wide-ranging set of reasons. There aren’t too many restrictions on what type of residential property you can fund, as long as you meet all the other eligibility criteria. With the USDA home loan, you can:

• Buy/build a new home
• Buy an existing home
• Buy an existing home and make improvements
• Refinance your existing guaranteed rural housing loan
• Buy a condominium (however, it must be “mature” rather than of new construction)
• Buy a manufactured home (in this case, it must be brand new, and be bought directly from an approved dealer or contractor)
• Cover the costs of legal feels, title services, establishment of an escrow account, and loan closing costs. Note, however, that there’s no cash back at closing and the loan can only be used to pay housing-related debts.