Florida USDA Mortgage Source Blog

Each day we receive many questions regarding the USDA mortgage here in Florida. Below we have outlined some of the most common questions and answers home buyers have about the program.

Question:  Can I include closing costs into my USDA loan? H Kincaid  – Gainesville FL

Answer: Yes, you will have two options to do this.  First, the most common way is to negotiate your contract to have the home seller pay your closing cost. USDA Rural Development will permit the  seller to pay up to 6% of buyers closing costs and pre paid escrow items.  Another option is to roll your closing into your loan given the appraised value is high enough to support it.  To use this option, the home must appraise higher than the sales price. USDA will permit buyers to roll in or include closing costs up to the appraised value of the home, not the just the sales price.  You can also do a combination of these two options.

Question: How much are the USDA loan closing costs and pre paid escrow items? J Collier – Tallahassee, FL

Answer:  The exact amount of closing costs, etc will depend on many different variables like your loan amount, current tax assessment on the home, home owners insurance policy amount, among many other items.  Generally speaking 3-6% of the sales price depending on how high the sale price is.

Question: I found the perfect USDA eligible home, but it needs some repairs. Can I borrow extra money in my loan to pay for new carpet and a new fence in the back yard?  J Vasquez – Winter Haven FL

Answer: Short answer is no, only closing costs can be included in your loan – assuming the appraised value is higher than sales price.

Question: I was reading the USDA housing program allows for 102% financing – does this mean we can receive 2% extra for repairs or money back. N. Zimmerman – Naples FL

Answer: The USDA 2% guarantee fee is the one time funding fee that is required by USDA Rural Housing.  All government loan programs require the funding fee, this fee is included or rolled into your loan amount.  Please click here to read a similar question. In addition to this, the USDA loan also requires a monthly mortgage insurance premium like FHA loans but much $$ less each month. ( most know this as PMI)

Question: I found a home that I like, but it has some issues with the roof and electrical.  Will this pass USDA home inspection requirements ? L. Jefferson – Cape Coral, FL

Answer: USDA ( like FHA and VA) follow many of the same HUD requirements when it comes to the property condition.  Generally speaking –  any safety, electrical, plumbing, structural, HVAC, Roof, or WDO termite issues will probably need to be corrected before closing.  It really depends on the seriousness of the problem and whether it will be required to be corrected before closing. Keep in mind many bank owned homes are being sold “as is” they will not correct or repair anything in most cases.  The house has to generally be in decent overall condition.  Now this doesn’t mean the house as to be perfect, every house has some little issues that are to be expected.  The idea is to insure homebuyers are purchasing a home in generally sound condition and don’t get in over their head with bad problems right after closing. Homebuyers looking to purchase a home that needs extensive repairs ( and money to do so) should read about the FHA 203K loan.

Question:  What houses are approved for USDA mortgage financing in my area? What type of properties are permitted?  Jose V – Clermont, FL

Answer:  USDA Rural housing is for ANY single family home, townhome, condo that is located in a USDA eligible location.  The house can be a short sale home, bank foreclosure,  REO, by owner sale….doesn’t matter.  The important factor is the physical location of the home, it much be located in a Florida rural housing approved location. Existing mobile manufactured homes are not permitted under the USDA program. Click here to view the USDA map for FL  Many locations just outside of Orlando, Jacksonville, Tampa are currently eligible. Do not assume your location is not USDA Rural housing eligible before checking or calling us, you may be surprised!

Question: I owned a home a few years ago, can I purchase a new home with USDA loans. Are these loans only for first time home buyers? D Clayton – High Springs, FL

Answer: No! any qualified buyer can use the USDA program to purchase their next home. The program is not reserved for only first time home owners.

Question: is there a limit on how much income my household can make each year with the Rural Development program ?  Where do I find this information? L. Bolden – Brandon FL

Answer: Yes, each county has a different limit based on a verify of factors  – number or members in the household, elderly and disabilities. Please click the underlined link to read more about USDA income limits in Florida.  If you income appears to be close to the limit, please contact us so we can formally review with you.

Question:  What kind of credit score do I need to pre qualify for a USDA loan?  J Duval – Sarasota, FL

Answer: We currently require a minimum credit score of 640.  However, this min credit score requirement does not guarantee USDA financing. USDA Rural housing has other requirements in place for borrowers that have any past bankruptcy, foreclosure, or short sales.  Mortgage qualifying requirements have changed drastically over recent years, and still are. Contact today for the latest approval requirements.

Question: I understand the USDA loan is 100% financing. But I have some money saved up and I would like to contribute a down payment, can I do that? K. Stanford – Spring Hill FL

Answer: For sure! USDA will permit buyers to put 3%, 5%, etc down payment if they choose. However, the program is geared toward buyers that do not have the means ( down payment) for a conventional home loan.  If you have 20% for a down payment for example, you will do a standard conventional mortgage.

Question: My realtor informed me that I cannot get a USDA loan if the house has a pool, is this correct? A. Myers  – Lakeland FL

Answer:  Pools are permitted with the USDA program. However, the value of the pool cannot be included in the appraisal, which can cause a problem in some cases. Click here to read more about USDA loans and pools

Question:  I found a property I would like to write a offer on today. But the house is located on a dirt road and my lender said USDA program requirements will not permit this.  Can you clarify this for me before I submit my offer. J Spencer – Homosassa FL

Answer: USDA follows HUD handbook requirements on road guidelines. Basically the road must provide safe vehicle and public access from a public or private road.  Additionally, all roads are required to have an all weather surface and maintained by a road maintenance agreement by all home owners on the street or home owners association.  In short, any home on a dirt road will likely not be eligible for USDA financing.

Question: Can I use the 100% USDA loan to purchase an investment home?  W. Quinn – Palm Coast FL

Answer: USDA can only be used to purchase a primary residence. Second home and investments properties financing are not permitted.

Question: I have determined that my area in Lee County is eligible for the USDA housing.  What do I need to get together for the USDA loan application and approval process?  G. Miller -  LeeHigh Acers FL

Answer:  Please click here to read amount being prepared for your USDA loan application.

Do you have a question we did not answer? Let us help by calling ph: 904-302-6060 or submitting the short request form on the right side of your screen. Please visit our main site at www.UsdaMortgageSource.com or many other program details. Not located in a USDA location? Learn about the FHA home loan by clicking here.