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

Welcome to DeSoto County. EST. 1887. Prosperity. Tranquility. Progress.,' reads the County's noticeable welcome sign. Named to commemorate the ancient Spanish explorer and conquistador, Hernando de Soto, DeSoto County has its charm.

The County is not as industrialized as St. Johns County or Duval County, and you'll be looking at the last tracks of pioneering development on your way here.

In other words, you'll no longer come across sights of oceanfront high-rises and coastal towns but green pastures stretching for miles across the horizon.

But remember, DeSoto County is genuinely a prosperous, tranquil, and progressive place. Living costs are low, neighborhoods are safe, and owning a home here is easier than you think, even with poor credit or low income.

Wondering how that's possible? It's simple. You only need to be eligible for a zero-down USDA mortgage, and that's it!

What are USDA Home Loans?

Despite the USDA being renowned for food, forestry, and farming matters, it's also – surprisingly – in the housing business.

USDA home loans are no-money-down, government-backed mortgages designed to help moderate- and low-income families acquire sanitary, safe, and decent housing in designated rural areas. However, these mortgages aren't entirely limited to rural areas – some suburban areas qualify too.

By offering homeownership opportunities in underserved zones, the USDA mortgage programs also encourage the development of rural and suburban communities.

Best part? These loans provide 100% financing, making them a steal for first-time homebuyers who might strain to gather the down payment but whose income is enough to cover monthly mortgage installments.

USDA Home Loan Programs

The USDA offers two types of mortgage programs to moderate- and low-income families who want a single-family home in a rural or suburban part of the country. They include:

USDA Guaranteed Loans

Through the Single-Family Housing Guaranteed Loan Program, loans are issued by participating private mortgage lenders and credit unions but guaranteed by the USDA. In simpler terms, these loans must be applied through the borrowers' preferred lenders, with the USDA only insuring the mortgages.

Contrary to the Direct USDA Loans, however, borrowers must meet a 1% mortgage guarantee fee payment (which could be made by the lender) and another 0.35% annual fee. But remember, guaranteed loans are issued by distinct lenders, which means they decide on the interest rate to use. So, rushing may not be a great idea – take it easy and look into different options.

USDA Direct Loans

Homebuyers are offered mortgages directly from the USDA rather than through participating lenders like guaranteed loans in this category. Generally, direct loans feature long repayment terms – typically 33 years, but some may even come with a 38-year repayment term, depending on family size and borrower's income.

But the deal doesn't have to end here. Some USDA borrowers are also lucky enough to get payment assistance, which goes a long way in reducing their monthly installments, even if temporarily. So, besides having a chance to qualify without a down payment, borrowers also enjoy interest rates going as low as 1% after subsidies.

USDA Loan Limits

The USDA doesn't impose a loan limit in the Single-Family Housing Guaranteed Loan Program, meaning there's no cap on the mortgage amount you can borrow. However, that doesn't make it a free pass to tons of money. The lender will still need to gauge your finances and only offer you a loan size they deem you can comfortably afford.

But we can't quite say the same for USDA direct loans, which, unlike guaranteed loans, have caps on the amounts. As of 2022, the loan limits for the Single-Family Housing Direct Loan Program are as follows:

  • For most USDA-qualified areas, the typical limit is $336,500
  • In high-cost counties, the limit can reach up to $970,800

USDA Home Loan Qualification Requirements in DeSoto County, Florida

USDA mortgages are available to moderate- and low-income American citizens, permanent residents, and foreign nationals who lack safe, decent, and sanitary primary residence.

To be eligible for the chance to become homebuyers, applicants must meet the conditions specified by the USDA. The essential qualifications are as follows:

Qualifying Location

Among the USDA's key objectives is rural and suburban development. As such, USDA mortgages only apply to areas whose homeownership chances appear to be scarce. Provided the location matches any of the category slots stated below, you may be eligible for a USDA mortgage:

  • The area should be rural with a population not surpassing 10,000

  • It should not feature in a Metropolitan Statistical Area, and its population should not exceed 20,000

  • It should be severely lacking in homeownership opportunities

Property Requirements

After ensuring that the property lies within a qualifying rural or suburban location, you'll also want to ensure that it meets the property standards set by the USDA. Fortunately, most of these specifications are the same as other types of mortgage financing.

But among these requirements are some that only apply to USDA mortgages. They are as follows:

  • The property's square footage should be between 400 and 2000 square feet and be modest and residential.

  • The property must be the borrower's primary residence. USDA home loans can't be used to acquire secondary residences, multi-unit properties, and investment properties.

  • The acreage size should be impossible to subdivide or convert into a commercial property.

  • The property must meet the appraisal guidelines set by the USDA

Debt-to-Income Ratio

Typically, you need a debt-to-income ratio not exceeding 41% to qualify for a USDA mortgage comfortably. You may still stand a chance of qualifying even if your DTI is much higher, especially if your other loan application aspects – credit score, savings, etc. – are impressive. But to build a better case for yourself, try to reduce the ratio as much as possible.

Credit Score

As a general rule of thumb, USDA home loans require applicants to have a 620-credit score, at least. But that's just the typical minimum score most lenders like to employ, with some working with 640.

However, some lenders like to be flexible with their credit score requirements. For example, they may look at your credit history to identify any instances of on-time payments or delinquencies. If they come across an issue or two, they may ask you to elaborate on them and why you believe that such instances won't recur with your USDA mortgage payments.

Income Limits

As mentioned, USDA home loans are purposed for low-income borrowers who need safe, decent, and sanitary housing. This means that only applicants earning below the stated income limits are deemed eligible.

There are three figures that lenders look out for when verifying a borrower's eligibility. They include:

  • Qualifying Income - the borrower must prove to the lender that their income can accommodate monthly mortgage payments comfortably.

  • Eligibility Income - The lender totals the entire household's income to establish that the applicant meets the stated income qualifications. Suppose the homebuyer lives with their spouse, sister, and adult son; the lender will add up all their incomes to see if the household qualifies.

  • Adjusted Eligibility Income - This entails the remainder after taking out childcare expenses and other costs of dependent family members. Typically, the household's adjusted eligibility income should lie below 115% of the designated area's median income.

Woman holding white house model and house key in hand

Benefits of Getting a USDA Loan

USDA home loans are not suited for everyone, but only for low-income families that could use safe, decent, and sanitary housing in a rural or suburban area. But despite that, these mortgages do come with several advantages. A few key ones include:

No Down Payment

The 0% down payment condition is arguably the most appealing aspect of USDA home loans. Applicants enjoy 100% financing, making it unnecessary to put any money down towards acquiring their single-family home.

For first-timers, saving up a down payment could prove a tall order, causing many to give up on the borrowing idea. Conventional loans, for instance, would require you, the home buyer, to make an average down payment of at least 5%, while other government-backed loan programs like the FHA go slightly lower to about 3.5%.

Nonetheless, USDA mortgages require no down payment – a factor that makes them the ideal mortgage program for first-time and repeat homebuyers.

Easy to Get Payment Assistance

Despite a down payment not being a compulsory requirement for USDA loans, you could make one if you like. And while putting money down is avoidable, your USDA loan's closing costs aren't.

But the good thing is that most USDA mortgage borrowers are lucky enough to qualify for assistance programs and gift funds, which are often available in abundance.

The aid might take the form of grants, which you might not be required to pay, and sometimes, it may come as a pardonable loan, which can be forgiven by residing in the home for a certain period. Applicants can use this assistance to put some money down if they wish and, most importantly, cover their closing costs.

Low Mortgage Insurance Premiums

Mortgage insurance is inevitable for most low- and zero-down payment mortgages. For instance, conventional loans require applicants to pay for PMI (Private Mortgage Insurance), with others like the FHA demanding homebuyers to pay an upfront fee, followed by regular mortgage insurance premiums throughout the loan term.

VA loan programs are quite an exception, though. They don't necessarily require mortgage insurance, although borrowers are expected to pay a loan funding fee, which constitutes a percentage of the buying price.

USDA home loans are no exception. Not only do they require an upfront guarantee fee, but also an annual MIP. But unlike the FHA and other government-backed programs, USDA loans boast reduced insurance rates, allowing applicants to make more savings than they would on other loan programs.

Favorable Mortgage Interest Rates

Keep in mind that the government backs USDA mortgages through the US Department of Agriculture. For that reason, home buyers are subjected to all-encompassing and low-interest rates that don't vary with their down payments, income limits, or credit scores.

The case differs from conventional financing – loan interest rates are calculated based on market and credit score factors.

Covers Different Types of Property

Applicants can use their USDA home loans to acquire distinct types of property, including:

  • Land (if you prefer constructing a new home rather than buying)
  • Single-family home
  • Manufactured home
  • Fixer-upper
  • Condo

You can't use your USDA mortgage to purchase a vacation home, let alone any investment or multi-unit properties. If you're looking to acquire a house with 2 to 4 units, an FHA loan might be the way for you.

Is Using Your USDA Mortgage to BUY a Home in DeSoto County, Florida, Worth It?

In all honesty, purchasing a home in DeSoto County is a great idea, considering the low living costs, chill neighborhoods, and the County's outrageously outdoor fun. Speaking of outdoor fun, here are a few major attractions in DeSoto County worth checking out.

Arcadia Municipal Golf Course

If golf is your thing, then be sure to find the Arcadia Municipal Golf Course fascinating. The players here are friendly, the grounds are beautiful, and despite the course being pretty testing, it's not overwhelming.

By following strict adherence to USGA guidelines, the Arcadia Municipal Golf Course ensures you get to experience golf as it's meant to be. Additionally, the golf course features a driving range that comes in handy anytime you wish to polish your skills during other players' rounds. Even more impressive, the course is open every day (except for Thanksgiving and Christmas days).

Lions, Tigers & Bears, Inc

Are you looking for the ideal outing for kids? Look no further than Lions, Tigers & Bears, Inc. As its name suggests, this wildlife sanctuary boasts amazing wild creatures, including unwanted exotic animals and endangered species that you can go to watch.

With pasture and prime upland oak habitat stretching across 40 acres of land, it delivers a permanent home to these creatures. Moreover, it even serves as a rehabilitation center for orphaned and injured native animals.

The facility is only open by appointment. So, schedule your kids guided tour by reaching out to them at 863-494-0054.

Peace River Campground

Spanning over 165 acres, Peace River Campground is your go-to camping spot. It offers several options with furnished apartments, shelters, and even RVs, giving you a memorable camping experience.

While here, go to whichever spot along the river's edge and watch birds, hike, fish, or even hunt for fossils until you get enough. And if the fun wears you out and you feel like you need a break, there's still a lot you can do – hit the campground's game room, playground, store, heated swimming pool, hot showers, etc.

Myakka River State Park

Florida is rich in national and state parks, with most travelers exploring them. They offer guests lots of educational, fun, and calorie-burning activities at little expense.

Myakka River State Park is one of these parks and undoubtedly one of the region's most significant. There's much to do here with diverse wildlife, varied environments, and undeveloped land stretching about 60 square miles. From kayaking, fishing, biking, and other typical park activities.

Applying for a USDA Mortgage in DeSoto County, Florida

Although not as industrialized as other counties in Florida, DeSoto County can make a dream residence for some. Suppose that's you; you might want to try and make it happen.

All you have to do is apply for your USDA mortgage! To do so, follow these straightforward steps:

  • To apply for the USDA Single-Family Housing Direct Loan, look up the USDA's fact sheet and apply directly through USDA Rural Development.

  • As for the USDA Single-Family Housing Guaranteed Loan, refer to the list of USDA-approved lenders and find one operating in DeSoto County. Consult your preferred lender regarding your USDA eligibility and any related clarifications.

Looking to Move to DeSoto County, Florida?

If DeSoto County sounds like an area you'd want to reside in someday, then perhaps you should already. As seen in this article, buying a home here might be easier than you think, provided you cut it for a USDA mortgage.

Remember, a USDA home loan doesn't necessarily require you to put any money down, and you can still be eligible even with a poor credit score or a low income. So, why stall anymore? Apply for your USDA home loan today and become the newest homebuyer in DeSoto County.

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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