A Guide to USDA Loan: With more than eight thousand miles of coast, snow-free winters. And a lack of income tax for the state It’s not difficult to understand why Florida is among the fastest-growing states in the nation and third in terms of population. While metropolitan areas such as Miami, Jacksonville, Tampa. And Orlando comprise the majority of the populace, 30 of our 67 counties are classified as rural.
For those who prefer a slower pace of life as well as ample space, a federally-backed U.S. Department of Agriculture (USDA) loan could make sense as the Florida mortgage option you’re searching for. Before we get started, let’s take a look at the benefits of a USDA loan and the people who could be eligible.
What is a rural area?
Though “rural” may conjure up images of vast farmlands or forests, The U.S. Census Bureau defines rural as “any area that’s not urban.” While it’s not entirely clear, the definition generally applies to any metropolitan area that has at least 50,000 residents within the city’s center.
What that means for those looking to buy a home is that there are lots of options. For homes in regions that aren’t that far away. A lot of these properties are in small towns across Florida and even in some suburban areas close to larger cities.
What is a USDA loan?
The USDA single-family housing guarantee loan program was established in 1991 with the aim of creating homeownership opportunities by assisting approved lenders to provide “100 percent-financed, no-money-down mortgages to eligible low- and moderate-income applicants.”
Although the USDA could finance a limited number of loans directly, this USDA Guaranteed Loan Program is a partnership through a consortium of approved lenders instead of issuing loans by itself. The lenders work with buyers to assess their needs and then issue loans to homeowners. To ensure that lenders continue to offer loans to homebuyers. The USDA loan program must provide insurance, guaranteeing the loan and reducing the risk for lenders.
How do I qualify for a USDA loan?
To be eligible to receive a USDA loan, the property you are looking to finance should be located in a rural area that is qualified to receive USDA loans. Additionally, applicants must satisfy the following requirements:
- You must be an U.S. citizen, a U.S. national, or what the USDA defines as “qualified alien.”
- Your earnings can’t exceed 115 percent of the household median income of the region where your house is located. These median income limits may fluctuate annually and depend on the city in which you are planning to purchase.
- As with FHA loans, the USDA single-family guaranteed housing loan program is only used to fund your purchase, refinance, or renovation of your principal home. Also, you cannot apply for the USDA loan to purchase the investment properties.
Contrary to conventional loans, USDA loans do not have an upper credit limit. However, the program says that applicants should be able and willing to manage the burden of debt. Additional information and guidelines for requirements for the USDA loan program are available on the USDA’s Rural Development website.
How can I apply for a USDA loan?
The first step in applying for the USDA loan is to meet with one of the agency’s active lenders. The process of applying for the USDA loan is essentially identical to applying for a traditional mortgage.
When you are looking for a home that is eligible for rural use. Pre-qualifying or getting pre-approved by a lender that specializes in USDA credit is a great idea. In this procedure, the lender will confirm your identity and examine your financial situation to determine whether you qualify for loans. In this situation, you might be required to provide a government-issued identification card. Your most recent pay stubs and tax return paperwork, as well as bank statements and other paperwork.
Once you have received approval, you can start exploring homes in regions approved by USDA Rural Development. When you’ve found the ideal property and the seller agrees to your offer. The second step would be to file an official USDA loan request. At this point, the lender will have the information needed but might want to verify certain details. In certain cases, the lender could need additional documentation.
Is a USDA loans right for you?
Living in a rural location is a great way to enjoy many advantages that include lower costs of living. Quick access to the outdoors, and a more relaxed and tranquil lifestyle. USDA loans are a great option for low- or moderate-income borrowers looking for a low-cost house purchase in a rural region. If you’re a qualified applicant, the USDA loan is among the few mortgage options that don’t require an upfront payment. Additionally, USDA loans don’t have an upper or lower credit score.
To explore the USDA loans, come to any Commercial Lending USA branch today. Commercial Lending USA is a USDA-approved lender. The Seacoast Mortgage team is available to guide you through the process of buying a home.