Did you know that USDA stands for United States Department of Agriculture. In the past, Many people think of USDA as “farmer loans” mostly used to purchase properties in country agricultural areas. That not so much the case today with the USDA home loan. In fact, properties in almost every area outside of the Florida’s major metropolitan areas, including Lee County, can be purchased with the 100% USDA loan today. A USDA loan provides low-cost government insured home mortgage loans that suit a variety of options. The program is especially great for Fort Myers first time home owners that have little to no cash savings for a large down payment.
So what type of mortgages does USDA offer?
Currently, there are two kinds of USDA loan programs available for single family households:
USDA 502 Guaranteed Rural Housing Loans:
USDA 502 Guaranteed Loans are the most common type of USDA loan and allow for higher income limits and 100% financing for home purchases. 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. Lee 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 Housing Loans:
USDA Direct Housing Loans are only offered directly by the USDA. These loans are less common than USDA Loan Guarantee Program loans 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 Loan Guidelines for 2014:
- Currently a min 640 credit score is required by most lenders as of 2014 - 2015.
- 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 – up to 6%
- USDA home loans do not have a set loan amount limit. The borrower 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, the USDA mortgage program will require an upfront guarantee fee and mortgage insurance or PMI. Effective 10/1/2014, 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. All USDA loans include taxes, home insurance and mortgage insurance.
Below we listed 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.
Please view all the most commonly asked USDA questions here -http://www.usdamortgagesource.com/blog/frequently-asked-usda-rural-housing-loan-questions/
Florida Homebuyers that have questions about the pre approval process, please contact us at ph: 904-302-6060 or visit www.UsdaMortgageSource.com
Homebuyers that don’t meet the income or locations requirements of USDA, please learn more about the FHA loan at www.FhaMortgageSource.com
Serving all of Lee County - Bonita Springs, Captiva, Cape Coral, Estero, Fort Myers, Fort Myers Beach, Fort Myers Shores, Fort Myers Villas, Gateway, Lehigh Acres, North Fort Myers, Page Park, Pine Island Center, Punta Rassa, Sanibel, San Carlos Park, St. James City
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