Skip to content
Fact Checked by Experts

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

Are you looking to buy a house in Escambia County, Florida? USDA loans can help you make your dream of homeownership come true. USDA loans are government-backed loans designed to make it easier for low- and moderate-income home buyers to purchase a house. While the requirements can be challenging to meet, the benefits of owning a home can be worth the effort.

While Escambia County has seen its share of economic trouble over the past few years, it doesn't mean you should miss taking advantage of USDA Loans.

The USDA loan program can help you qualify for a home loan with no money down and relatively low interest rates, even if you have less than perfect credit or are otherwise considered high risk.

Read on to learn more about this popular government program, how you can obtain zero down financing to purchase your home, the benefits of using these USDA loans, and more exciting things about Escambia County, Florida.

What is a USDA Loan?

In short, a USDA loan (commonly referred to as a rural development loan) is a government-backed mortgage program insured by the United States Department of Agriculture USDA designed for eligible low-income families.

With these loans, there's no down payment required for new homebuyers—essentially making USDA lending one of the most affordable ways to purchase a home in the U.S. You'll also benefit from a more favorable interest rate than you would get on a conventional mortgage.

If you're willing to purchase a home in an eligible rural area in Escambia County—as defined by U.S. law—you can obtain no-money-down financing with USDA mortgages. Let's take a quick look at more key information you need to know about USDA loans.

Who Qualifies for This Type of Loan?

The USDA loan is for low-to-moderate-income home buyers. Individuals and families who live in rural areas may qualify for a USDA loan. It's essential to keep in mind that not every location is eligible for this program.

However, you're not limited to using a USDA loan to purchase a home loan in rural areas only. You can get one in rural or suburban areas in Escambia, as long as they fall into one of the following categories:

  • Places with a population of 10,000 or less that are primarily rural in character or open country

  • Population below 20,000 and not located in a Metropolitan Statistical Area (MSA)

  • The area has severely limited home loan opportunities for low- and moderate-income borrowers.

Since many programs and qualifications are based on income and other factors, it's a good idea to speak with a mortgage specialist who can walk you through your options. And remember that not every lender offers USDA loans. Ensure you work with an experienced mortgage broker or bank familiar with these types of mortgages.

Basic Loan Requirements

There are requirements for just about everything when you buy a home. But some things change when you decide to get a USDA loan. To qualify for one of these loans, you must meet specific criteria and learn more about what you need to have on your side.

If you're interested in purchasing a home with zero down payment via a USDA loan, below are the essential requirements you must meet:

  • Be a legal U.S. citizen
  • Be a legal foreign national with proof of nationalism.
  • Be a permanent Escambia County resident.
  • You're unable to obtain a conventional mortgage.
  • You're buying your home in a qualifying location.
  • Your household income meets the limits set for USDA loans

Private Mortgage Insurance (PMI)

The term private mortgage insurance refers to the insurance offered on conventional mortgages not backed by the government. So, USDA mortgages do not have private mortgage insurance. Since a government agency insures them, you do not need to pay any additional fees upfront when applying for a new USDA loan or refinance an existing USDA loan.

USDA mortgages have the lowest funding fee of all government-issued loan products. Despite this, you'll have to pay a little upfront guarantee fee and an annual fee equal to 0.35% of your loan. A guarantee fee of 1% is applicable for USDA loans which is amazingly low compared to the V.A. funding fee (2.15%) and FHA funding fee (1.75%). For instance, the guarantee fee for a $250,000 mortgage will be $2,500 only.

What Kind of Properties Qualify?

USDA loans are typically used to purchase single-family homes, including existing homes and new construction. A USDA loan can also be used for a manufactured home, land for new construction, fixer-uppers, or condo unit if it meets specific requirements.

Apartments and other multi-unit properties are not eligible for USDA financing. You must occupy or use your property as your primary residence and not as an investment property.

Debt-to-Income Ratio (DTI)

Debt-to-income ratio is one of many factors that lenders consider when approving or denying your mortgage application. It measures how much income you have left over after paying all your debts.

A high DTI may be hard to cover your monthly housing costs and other expenses, particularly if interest rates rise. You will generally need a DTI of 34% to 46% or less to qualify for a USDA loan, but you might get approval if you get approved by USDA's guaranteed underwriting system.

Loan Limit

Although it may not seem like it, there's a limit to how much money you can borrow. In most cases, you will not find a stated loan limit with your USDA loan. However, the USDA Direct Loan program loan limit for 2022 is $336,500 for most qualifying places in the U.S., with some high-cost areas getting up to $970,800. Your lender will set this limit based on several factors, including your income, credit score, and DTI.

Loan Term

The United States Department of Agriculture allows only 30-year, fixed-rate mortgages. A 15-year or adjustable-rate mortgage (ARM) won't work; you'll need to look for loans elsewhere. However, you can get a USDA mortgage and later refinance a few years down the line to the terms you want. But note that you'll have to pay closing and origination fees for the new refinancing loan.

Woman holding mortgage paper and calculating

Benefits of Applying for a USDA Loan

A USDA loan isn't the only government-backed mortgage program available, but it has some great benefits that most people don't realize until they consider it. Not only can this loan help you purchase the home of your dreams, but it can also offer some extras during the application process and afterward.

Look at the top five benefits below to determine if this program will work for you and your family.

No Down Payment Required

Unlike other types of mortgages, USDA loans do not require a down payment. If you have limited cash on hand but have a stable income and good credit, you will likely be eligible to borrow with ZERO money down. Plus, because the program is backed by the U.S. Department of Agriculture (USDA), your monthly mortgage payments are often substantially lower than other home loan options.

You're Eligible for Lower Interest Rates

If you apply for a loan at your local bank, you'll likely be granted an interest rate of 10-15 percent. But if you apply for a loan through your local United States Department of Agriculture, you can expect to pay less than 5 percent interest—and in some cases, no interest.

With a lower interest rate, you can keep more money in your bank account—money that could be used to improve your business or pay off other loans. You may also have the opportunity to get out of debt faster.

100% Financing of the Home Value

When you apply for a USDA home loan, you get 100% financing in most cases. 100% financing means that if your home is worth $200,000, you can take out $200,000 to cover its purchase price and closing costs. This means you won't have to add extra money to your loan to reach the home purchase price. Make sure you take care of your loan per your contract and mortgage agreement.

Can Use Gift Funds and Grants for Closing Costs

The closing costs of obtaining a home loan vary by location but are often substantial. The U.S. Department of Agriculture does not charge upfront or servicing fees and can allow borrowers to apply gifted funds toward their closing costs.

You have the option of using grants from various sources for these costs, as well. One of the famous grant programs is the Hometown Heroes Grant Program, which offers up to a $35,000 grant to veterans, active military personnel, surviving spouses, and eligible workers.

No Private Mortgage Insurance (PMI)

PMI is a fee added to many conventional mortgages if you make less than a 20% down payment on your home, and it is based on your loan-to-value ratio. While PMI can be costly, if you're eligible for a USDA loan, there will be no PMI to worry about—one of its most-coveted benefits. Avoiding PMI can save thousands of dollars on your home purchase or refinance.

Reasonable Credit Score Requirement

Another benefit of applying for a USDA loan is that you can qualify even if your credit score isn't great. Many lenders, especially rural ones, require applicants to have an average credit score. However, in most cases, USDA will only require a 620 or 640 FICO Score, and if you don't meet that requirement, there are still options available with other loan programs.

The Application Process Takes Less Time Than You Think

If you're familiar with other home loans, you'll know they often require mountains of paperwork and weeks—if not months—of waiting. However, the USDA loan application process takes about 45 days from start to finish, which isn't as much time as you might think.

Top Outdoor Activities to Do in Escambia County, Florida

Escambia County, Florida, offers many unique outdoor activities for residents and visitors to enjoy year-round. From nature trails, fishing ponds, paddleboarding, horseback riding, sandy beaches, and other natural water resources, there are plenty of fun things to do that don't involve dealing with the hassle of traffic on the nearby interstate highways.

Here are the top five outdoor activities in Escambia County that make it easy to enjoy the Florida lifestyle with all its attractions.

Visit the Spectacular Sandy Beaches

There are several beaches that you and your family can enjoy all around Escambia County. From public beaches with lifeguards to those with great fishing spots, these sandy areas offer something for everyone. While you're there, take some time and look out at Pensacola Bay or even up at Pensacola Beach for amazing views. This destination is sure to delight young and old alike. Below are more beautiful beaches in Escambia to stop by during your free time:

  • Perdido Key State Recreation Area
  • Naval Live Oaks Nature Preserve
  • Gulf Islands National Seashore
  • Big Lagoon State Park
  • Perdido Key Beach
  • Navarre Beach
  • Casino Beach
  • Fort Pickens
  • Opal Beach

Do Paddleboarding

Paddleboarding has become increasingly popular over recent years. It is a recreational and competitive sport that can be enjoyed in nearly any location with water. If you're looking for some leisurely paddleboarding around Escambia County, below are the top destinations to enjoy the water sport with your family or friends.

  • Dog Beach
  • Perdido Key
  • Pensacola Beach
  • National Seashore
  • Public Beach Access
  • Pensacola Beach Eco-Trail

Try Kayaking

Another great way to take advantage of nature's beauty is by kayaking. The good news is that you don't have to own a kayak since kayaks can also be rented from most locations. It's a good idea to check with the store before going out to know what kind of water conditions they're expecting and what type of kayak they have available for rent. Some places offer lessons on how to kayak, which would be a good idea if this is your first time. Below are some of the best kayaking destinations in Escambia County:

  • Wilson B. Robertson Boat and Kayak Launch
  • Perdido Natural Adventures Molino
  • Perdido Key Boat Launch
  • River Road Kayak Launch
  • Fillingim Landing
  • Ruby's Fish Camp
  • Johnson Beach
  • Galvez Landing
  • Dickson Park
  • White Island
  • Gibb's Point
  • Linear Park
  • Navy Point

Visit the Amusement Parks

Escambia County is host to some of the best amusement parks in Florida. While you won't find roller coasters in most parks, there are carousels, plenty of live entertainment, and several fun slides that will provide plenty of thrills for everyone in your family. In addition to great rides, every park has an arcade with multiple games. You can visit and buy affordable tickets in one of the following amusement parks in Escambia and enjoy a day with your family or friends:

  • Fast Eddies Fun Center
  • Sky Zone Trampoline Park
  • Seville Square
  • Ascend Park
  • Fort Pickens
  • Perdido Kids Park
  • Uncle Sandy's Macaw Bird Park
  • Big Lagoon State Park
  • Advanced Amusement-NW Florida
  • Vince J. Whibbs Sr. Community Maritime Park.

Go Camping

Many people will tell you that all other sleeping arrangements will seem boring once you've experienced sleeping under a starry sky next to a fire pit at night. A few nights out of your routine will help re-energize your mind and body and create a new appreciation for outdoor time. You can go camping in Escambia county so many places and parks. Whether you want a short drive out of town for a weekend or a more extended trip into nature for weeks at a time, there is something for everyone. Below are the famous camping grounds around Escambia County:

  • Escambia County Lake Stone Campground
  • Big Lagoon State Park Campground
  • Fort Pickens Campground
  • Pensacola RV Park
  • Five Flags RV Park
  • Leisure Lakes R.V. Resort
  • Bluff Springs Recreation Area
  • Perdido Key RV Resort & Marina
  • Blue Angel Recreation Park, Battleship Row

Bottom Line

If you're in the market for a new home but don't have the down payment to fund it, you may consider obtaining USDA Loans in Escambia County, Florida. These loans can get you into your dream home with little or zero down payment and allow you to make monthly payments based on your ability to pay, not the size of your house.

Invest your time learning more about USDA loans before applying for their free zero-down mortgage that can help you realize your dreams of homeownership. Understanding everything will help you prepare beforehand, comprehend what you're signing in to, and enjoy a straightforward loan application process.

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.

Find The Right Mortgage

For more than 20 years, Phil have been helping customers achieve their home purchase and refinance goals by providing them with invaluable resources and support.

Schedule a FREE Consultation
Phil Ganz

Subscribe to Get Your First Time Homebuyer Checklist

Sign up for the weekly newsletter to stay up to date on the latest real estate market trends, loan news, and so much more!