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USDA Loans in Bay County, Florida: Learn How to Obtain a Zero Down Mortgage

There are several options you could use when purchasing a home in Florida. For instance, you could opt to pay cash, apply for a bank loan, or use various mortgage financing programs created by the government. Government-financed programs are perfect for low-income individuals with an average credit score, with three types to choose from.

You could apply for an FHA, VA, or USDA home mortgage. These options require applicants to meet specific eligibility criteria.

Eligibility for FHA (Federal Housing Administration) loans requires individuals to make a 10% down payment if their credit score falls between 500 and 579. Alternatively, they can make a 3.5% down payment if their credit score is 580 or higher.

VA loans are designed for individuals who have served in the US military, navy, or air force and have been honorably discharged. Most lenders set their unique credit score requirements for their applicants; however, it averages 620 for many lenders.

You probably associate the USDA (United States Department of Agriculture) with programs like plant inspections, food safety, or the food pyramid. The USDA is quite different. In that, it is tied to individuals that live within a particular region. The USDA also works with forestry and farming.

However, were you aware that the department is also involved with rural development?

The USDA aims to help families living in rural areas to purchase homes and become homeowners.

It aims to help them create stronger communities and enjoy a better quality of life. It offers mortgages for low-to-moderate-income families through its Single-Family Housing Guaranteed Loan Program.

We've got your back if you want to apply for a USDA mortgage in bay county, Florida. Read on to find out how you can go about it.

What is a USDA loan?

USDA loans are competitively priced, government-backed mortgage options designed to help low-income individuals residing in designated rural areas purchase homes through affordable means.

The USDA backs these loans similar to how the Department of Veterans Affairs backs loans offered to eligible individuals like veterans and their families.

No-money-down mortgages with government-assisted mortgage rates help eligible individuals get lower rates than government-backed programs like the VA and FHA.

The USDA does not require any downpayment, meaning that individuals can borrow as much or as little as they want to purchase a home.

91% of the US is considered rural, meaning you could get access to a loan at lower rates from the USDA than the rest of the homebuying population.

However, the home should be in a less densely populated area or rural location to qualify for the loan. Rural areas include places with a lot of farmland, a town's outskirts, or a large city's suburbs. It could be any location that isn't considered an urban area.

How do USDA loans work?

The USDA acts as your guarantor when your mortgage lender facilitates your home purchase using a USDA loan. This helps assure the lender that you make your payments. It reduces the lender's risk and helps them provide low interests with no down payments making it easier for you to access the loan.

The amount of downpayment you choose to make it up to you. While the USDA does provide 100% financing for your mortgage, you could make a down payment if you wanted. You can make the downpayment yourself, or it could come from your parents, grandparents, other family members, or a charitable organization.

What credit score should you have to access a USDA loan?

The USDA officially states in its rulebook that individuals must have a credit score of 640 to be approved for a loan. However, it can still approve individuals with no credit score and those with a credit score less than 640 on a case-by-case basis.

Types of USDA loans

There are two types of USDA mortgages. They include 15-year and 30-year fixed rates. The US Department of Agriculture does not provide adjustable-rate mortgages to home buyers.

How do you qualify for a USDA loan?

There are various eligibility guidelines that you must follow to qualify for a USDA loan. You should:

  • Prove your creditworthiness
  • Be a legal permanent resident
  • Maintain dependable income
  • Be the primary residence in the rural area
  • Have a household income that matches 115% of the area's income or lower

Do you need to repay your USDA loan?

You must repay your USDA loan even if you move before the loan is paid off or if you choose to sell the house.

What are the benefits of a USDA loan?

The USDA loan is not suitable for everyone, especially individuals that want to buy their home in an urban area. However, they have several benefits for those looking for more accessible alternatives for purchasing homes in rural areas. They include:

Zero minimum Down Payment

You do not have to make any down payment when purchasing your home using USDA financing. This makes it easier for low-income individuals in rural areas who want to buy homes to get the financing they need. It's the best alternative if you don't have enough funds to make a down payment.

Easy refinancing

Homeowners purchasing their homes with USDA mortgages can refinance quickly using the USDA's Streamline Refinance in case mortgage rates drop in the future. You only need to prove that you've repaid your mortgage on time for the previous 12 months to get approved. Once approved, the refinance lowers your payment by 50 dollars per month.

The loans can cover repair costs

USDA mortgage loans allow prospective buyers to borrow 100% of the home's purchase price. It also provides an additional 27500 dollars for home improvement and repairs. Types of repairs allowed include:

  • Remodeling to improve access for disabled individuals.
  • Roof replacement.
  • Making the home energy efficient.

What does the USDA loan's zero down payment imply?

One of the most complex challenges when purchasing a home is saving money for a down payment. However, USDA loans make it easy for individuals living in qualified suburban and rural areas to buy homes with a 0% down payment. However, you have to qualify to get financed.

What is the catch?

There is no catch, per se. The US government created the program to help people purchase homes in suburban areas to encourage economic development in such communities. The USDA can finance your home purchase if you qualify for the eligibility mentioned above, and you can get a 0% down payment.

Family unpacking cardboard boxes at new home

Can you qualify for the loan if you bet some but not all of the eligibility criteria?

Qualifying for a USDA loan if you meet some of the requirements depends on what requirements you meet. Some non-negotiable requirements are sure to affect your chances of qualifying. They include income limits and location.

Income limits

You won't qualify for a USDA loan if your adjusted household income exceeds your area's income limit. These loans are meant to help individuals that don't have any other means that could enable them to buy a home which is why they have income limits.

The USDA will decline your USDA mortgage application if your adjusted household income exceeds 115% of your area's median. This includes your income and everyone else who lives in your household, including your spouse and any dependents that earn money.

An adjusted household income is your total household income after making certain deductions. The deductions include childcare expenses and allowances for dependent children. Thus, you could still qualify for a USDA mortgage if your total household income is more than your area's average by removing your deductions.


As mentioned, you should purchase your home in a qualifying USDA-eligible location. You could check if your location qualifies for a USDA loan through the USDA's property eligibility map.

The lender will check your history, credit score, and employment history. They'll also consider your debt-to-income ratio to know if you qualify and how much funding you can get. You are good to make your application if you meet these criteria.

Often, lenders consider individuals with a credit score of 620 or more and a low DTI (Debt-to-income) ratio derived from your Automated Underwriting results. However, the USDA is more flexible when determining an applicant's creditworthiness.

Thus, you can qualify even with a low credit score and a high DTI. However, you should note that individuals with a high credit score and a low DTI have better chances of qualifying for a loan.

USDA loan limits

Another great benefit about USDA loans is that they have no loan limits capping the amount of funding for which a borrower can be approved. However, your finances do play a huge role regarding how much you can borrow. The lender can limit the amount of funding you'll get based on your DTi, credit score, income, and down payment.

The program's income requirements indirectly curtail your loan size because lenders will not approve loans likely to push their lenders into financial hardship. This is why it's uncommon for loan amounts to rise more than $400000 in some locations. You should consult with your lender to know how much financing you are eligible for.

Private Mortgage Insurance for USDA loans

Typically, USDA loans have lower private mortgage insurance than FHA, VA, and conventional loans. This may not be as attractive as 100% financing or competitive interest rates; however, it does affect how much your home will cost.

That said, USDA loans don't have PMI; however, they have their form of insurance known as the USDA mortgage insurance. Approved borrowers must pay 0.35% of their existing loan as mortgage insurance. The amount of cash paid as insurance drops as the remaining loan drops.

This mortgage insurance is similar to conventional PMI since it serves a similar purpose. The annual fee protects mortgage lenders and the USDA from potential losses. The insurance is a bit like car insurance. It helps protect involved parties in case the borrower defaults on their loan.

Lenders that approve loans with less than 20% down payment usually charge mortgage insurance to protect themselves if the borrower defaults, and parties working with the USDA are no different.

How does it work?

You can pay USDA mortgage insurance fully for 1% of the entire loan, or borrowers can pay an annual fee of 0.35% paid monthly. Lenders don't have to make a separate payment for their mortgage insurance. Instead, it's added to and paid together with the monthly installments.

When paying the 1% USDA mortgage insurance, most lenders usually add it to the loan amount. Borrowers can do this even when the final loan amount exceeds the appraised value. Alternatively, they could choose to pay for the insurance with cash, seller contributions, or gift funds, depending on whether the funds are available.

The USDA's mortgage insurance is lower than most conventional and FHA loan rates (even though it's government-backed). You'll pay the insurance for the loan's duration unless you reach 20% equity and choose to refinance it with a conventional loan.

Are USDA loans assumable?

USDA loans are assumable, which means you can transfer them to future home buyers at the same interest rate. You could sell the come with its current mortgage rate intact in five years. This makes the process more accessible because of the already-low mortgage rate.

Outdoor activities you can enjoy in Bay County, Florida

Most people may think buying homes in rural areas is terrible; however, there are some great locations with unique activities that you are sure to enjoy. Bay County, Florida, is one of these places.

The county is consistently ranked as one of the best locations to visit and stay. It has miles of splendid coastline and beaches, the best southern hospitality, and excellent recreational activities.

Some activities you may enjoy include:


Bay county is one of the best recreation destinations in Florida. On average, the county has 239 sunny days providing residents and visitors with the perfect weather to enjoy various outdoor activities. You could spend the weekend playing golf or relaxing and enjoying some arts and entertainment in the city.

You can take part in many other activities if you enjoy outdoor activities. For instance, you could also participate in sunning, boating, and fishing in area lakes. You could also go for a late evening stroll along the beach.


Bay County area is also perfect if you love shopping. For starters, you could visit Pier Park North shopping center in Panama beach. The shopping center was opened in 2014 and has expanded to the Pier Park Lifestyle Center, which currently includes various national retailers.

You could also visit Panama City Mall and shop in over 100 specialty stores. The mall is encircled by shops and anchored by various national retailers and restaurants. You could also visit downtown Panama city, shop in various boutiques, and dine in locally-owned restaurants.

Culture and events

You can visit Aaron Bessant Park and enjoy various shows and concerts year-round. Enjoy some great food in local restaurants and visit the Marina Civic Center. You can also have some fun visiting Panama City Beach, famous for its outdoor events.

You can also participate in the Friday fest in downtown Panama city bay. It's the largest street festival and features over 50 vendors and more than 200 show cars. The festival begins in March and ends in November.

Parks and facilities

You can visit the protected Apalachicola rainforest and do some hiking, off-road biking, swimming, boating, horseback riding, hunting, etc. You can also have some fun visiting various parks in the county. The forest provides the perfect opportunity to explore nature from a closer perspective. An experience that most people rarely get to enjoy.

The forest has two wilderness areas and various special-purpose areas where you could explore and participate in some memorable activities with friends and family.


You can also choose to visit Bay County's library, which is part of a regional library system (the Northwest Regional Library System) that serves liberty and gulf counties. Bay county's library is the headquarters for the entire system. The library has various historical and scholarly documents that you may find interesting.


USDA loans are perfect for low-income individuals that want to settle in rural areas. You can apply for a USDA loan in the Bay County area; however, it would be good if you ready your document and research what you need to qualify for the loan. This article helps you understand what you need to apply for and qualify for a USDA loan.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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