$0 Down USDA Mortgage LoanThe USDA has a no money down program that many in Florida can take advantage of!
The Florida USDA Mortgage Home Buying Program:
In 1990 the Farm Bill enacted the USDA mortgage program to help develop rural communities with a 100% financing mortgage option. The USDA mortgage program can be used for existing block, frame, or modular homes. It can also be used for new manufactured homes. The program is truly a zero down program. As with any loan you will still have closing costs when purchasing a home. You can however negotiate with the seller to pay all or a portion of your closing costs. Unique to this program though, you can actually finance your closing costs if the home appraises for higher than the sales price up to the difference between the two. This feature makes the program extremely flexible for borrowers wanting to keep as much of their own cash in their pocket as possible. So for example if you are under contract for a new home for $200,000, but it appraises for $203,000, you can finance $3,000 of your closing costs. The USDA loan program has flexible guidelines in regards to trade line history and seasoning requirements for major derogatory credit history. If you currently have a USDA loan there is a also a great refinance program. USDA loans are one of my favorite programs to help people with because the terms are so favorable compared to other loan programs.
The program was created for rural America but many cities still have eligible locations for home buyers to be able to utilize the program. Often times its a matter of finding a home on the outskirts of town but in some cases you can surprisingly buy in the middle of more developed areas. The USDA calculates area eligibility based on population density. You can search for eligible areas at the USDA property eligibility page. To search just accept the disclaimer and choose single family housing under property eligibility. You can also reach out and we will provide a map of your area.
The program has household income thresholds designed to limit the amount of people who can utilize the zero down program. The typical household income limit for the Florida USDA mortgage is about $86,850 for a household of 4, but that figure can vary depending on the county you are buying in. That can be one person making $86,850 a year or 4 people combined. This figure can change from county to county depending on the median income. For a household of 5 the household income limit is about $114,650. Certain deductions can be utilized to lower the calculation of the household income, call for details.
Can I Own A Home Already?
It is possible to own a home and use the program, but its a very unique situation that the USDA allows this. Generally the program is for renters, not just first time home buyers. There are a few cases however that qualify. If you are retiring from up north and have your home for sale you could potentially use the program here in Florida if you qualify for both payments. Also if you have a disability that requires you to change your residence, for instance if its not wheel chair accessible then you could qualify for a USDA mortgage even if you own another home. Additionally if your home no longer has enough bedrooms to accommodate the size of your family then the USDA could allow you to use the program.
620 Minimum Credit Score
Not every mortgage bank goes down to 620 but we do. The typical threshold is 640, the program does allow for more flexibility with a 640 or over in terms of debt to income ratios and potential collections. With scores between 620 and 640 a manual underwrite is required and we are glad to do them. In rare cases we can do a USDA mortgage under a 620 credit score down to 600. Keep in mind with a score of 640 you are more likely to get whats called a GUS approval which allows debt ratios up to a 31% front end and a 46% back end.
The government has a 1% funding fee for the Florida USDA mortgage program. So whatever your base loan amount is, it will increase by 1% to cover their fee to keep the program going. There is also a monthly factor of .35%. This is lower than FHA or most conventional mortgage insurance. It is calculated based on the principal owed, so as the principal reduces your mortgage insurance payment reduces as well. For example if you had a $100,000 loan your mortgage insurance would be $350 a year, and $29.17 a month.
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