If you thought you never had a chance at homeownership because of inadequate finances and low savings, then consider USDA Rural Housing Loan. Most of Escambia County is eligible for the program making it perfect for first time home buyers that have limited savings for a large down payment mortgage.
What Exactly Is a USDA Rural Housing Loan?
The United States Department of Agriculture provides low-cost insured mortgage loans to suit a variety of home purchase options. USDA Rural housing loans give home buyers a piece of mind with extremely low closing costs and no down payment requirements. Simply put, these are flexible $0 down payment government-backed loans. These loans are designed with a mission to promote homeownership among residents in rural communities Escambia County with low and moderate income – who have limited savings for a down payment.
Types of USDA Rural Housing Loans:
The USDA loans can be divided into two types, USDA Guaranteed Loan and USDA Direct Loans. The USDA Guaranteed loan also known as the Section 502 Guaranteed Housing Loan is the most common type of USDA rural housing loan. This loan enables moderate income applicants in to acquire decent and sanitary housing in eligible rural areas throughout Florida. The loan is processed and underwritten by approved USDA lenders like Coast 2 Coast.
To qualify for this program, applicants must:
- Agree to occupy the housing as a primary residence
- Be a US citizen or Qualified Alien
- Have adequate capacity to meet loan obligations
- Not be suspended from participation in federal programs
- Have a credit fico score of at least 620
- Household income below the USDA income limits for your county.
This loan lends applicants up to 101 percent of the home’s appraised value (1% funding fee included into the loan) And also allows buyers to include USDA closing costs in the actual loan assuming the home appraises for higher than the sales price. It has a 30-year loan term with a low fixed rate.
The other type of USDA loan is the Direct Loan. This is not as popular as USDA Guaranteed Loan. It is only and exclusively available for very low-income households (below 50% of the area median income) and is processed by the USDA Rural Housing directly.
USDA Rural Development Loans vs. FHA and Conventional Loans:
In comparison to conventional loans, a USDA home mortgage offers a ton of benefits and protections to borrowers such as:
- Zero down payment – In comparison to the FHA loan which has a 3.5 percent down payment requirement, USDA Rural Housing home loans require no down payment in select locations making it extremely easy for borrowers to realize their homeownership dream.
- Credit flexibility – Unlike conventional loans, USDA loans are not totally credit score focused. Although a 620 score is required to be considered.
- Low Mortgage Insurance – This alone allows you to save $50 to $250 per month depending on your loan size.
Eligible Properties For USDA:
Although USDA loan guidelines require borrowers to occupy the property as their primary residence, there is no restriction on the type of property that they can purchase. USDA loan allows borrowers to purchase from a variety of property types such as condos, single-family residences and planned unit developments as long as they are located in a USDA-approved zone. Many locations in Escambia County outside of Pensacola are still eligible. Manufactured homes are not permitted.
Buyers can contact us by calling ph: 904-810-2293 to learn more about applying for USDA loan.