What Is A USDA Loan?
The United States Department of Agriculture (USDA) offers loan programs for low- to moderate-income
borrowers in eligible rural areas. The programs are managed by the USDA's Housing and Communities
Facilities Programs (HCFP). The USDA has a program to insure loans made by lenders as well as offers
direct loans to applicants. These are called Section 502 loans.
USDA Borrower Requirements
Borrowers must have a qualifying debt-to income ratio
There are income limits, and borrowers cannot have an income that exceeds more than 115% of the median household income for the rural area the property is located in. These income limits can be found on the USDA's website by clicking here.
The loan term is set at 30 years
This program typically requires a minimum credit score of 640. However, the USDA doesn’t have a minimum credit score, so borrowers with scores below 640 may still be eligible for a USDA-backed mortgage.
USDA Property Requirements
To see what locations qualify for USDA loans, you can click here.
The home must be modest in size, cost, and design, and must meet state construction guidelines and HCFP site standards. For new manufactured houses, the house must be attached to a permanent foundation as well as meet HUD safety standards and HCFP site standards. Existing manufactured houses will not qualify unless it was previously financed with a HCFP loan.
There are many areas in Florida close to major metros like Tampa Bay, Orlando, and Sarasota that have USDA eligible areas close by. If a home buyer is willing to live slightly on the outskirts of these major metropolitan areas, they can take advantage of a 0% down USDA loan and more affordable home prices.