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

Most of the population in the U.S. lives in urban areas. However, residing in a rural or suburban area may be more appealing. If this is the case, the United States Department of Agriculture (USDA) Rural Development program can help you buy a home even if you cannot afford a down payment.

Every year, the USDA invests billions of dollars in helping low and moderate-income households across the country access decent housing. You can take advantage of the zero-down payment USDA home loan to purchase your dream home in Franklin County, Florida.

What is a USDA Loan?

The USDA Home Loan program is part of USDA's single-family housing assistance program. The program was developed to boost the economies in rural areas and improve the quality of life.

The USDA loan program aims to encourage more people to buy, build or renovate homes in rural and suburban areas by making mortgages more accessible to borrowers.

A USDA loan is a fixed rate 100 percent financed mortgage available to rural and suburban residents who cannot access adequate housing through conventional financing. USDA loans have no down payment requirements compared to conventional and government-backed loans. The zero down payment aspect is one of the critical benefits of USDA home loans.

This housing-assistance program is designed to serve eligible rural and suburban residents with incomes below 115 percent of the area median income (AMI). The loans also have lower income requirements. USDA-approved private lenders offer the loans, which the USDA guarantees or insures. The USDA can also offer loans directly.

Since the government backs USDA loans, private lenders can offer benefits you wouldn't be able to access with conventional mortgage products. One of these benefits is zero down payments, alongside less stringent credit requirements and relatively low-interest rates.

Two main types of USDA loans are direct and Guaranteed Loans.

Direct Loans

The USDA originates and issues direct loans, not private lenders. The department provides housing assistance via a subsidy, which reduces the mortgage payments for a brief period.

Direct loans are aimed at low and very low-income households in qualifying rural and suburban areas. Direct loans have lower income limits than Guaranteed Loans (50-80% of the area median income). The property you can purchase with a direct loan must meet several requirements.

Guaranteed Loans

Approved lenders issue guaranteed loans, which the USDA backs and insures (up to 90% of the loan amount). This means that the USDA will step in and pay if you default on the loan. You get 100 percent financing, meaning you won't have to make a down payment.

The lending and location requirements for guaranteed loans are less stringent than the ones for a direct loan. Guaranteed loans are aimed at low to moderate-income households in eligible rural and suburban areas. Your income must not exceed 115% of the area's median income.

Benefits of a USDA Loan

The USDA home is one of the most advantageous housing assistance programs if you want to purchase a home in Franklin County, Florida. Since the federal government guarantees the loans against default, approved lenders can take on more risk and offer favorable loan terms and several benefits.

No Down Payment

Conventional and FHA mortgages require you to put down 5-20 percent and 3.5 percent of the home value as a down payment, respectively. Saving for a down payment is usually a challenge for many homebuyers. This is more so if you earn below or around the area median income.

Of the many benefits of USDA home loans, the most cited is the ability to access 100 percent financing. A USDA loan enables you to obtain a mortgage without putting any funds down, eliminating the need to save up for years for the down payment.

Along with Veteran Administration (VA) loans, a USDA loan is among the last remaining no-down-payment mortgage products available currently. If you cannot afford the down payment for a home in Franklin County, you can still achieve the homeownership dream through the USDA home loan program.

Competitive Interest Rates

Because of the USDA backing, approved lenders can shoulder more risk and thus offer competitive interest rates compared to conventional and other government-backed mortgages. Usually, USDA loans often have some of the lowest interest rates of any mortgage product.

The USDA doesn't set interest rates. The actual interest rates will vary depending on the private lender. Other key factors affecting your interest rates include your credit profile and the current market conditions. USDA loans also have fixed-rate interest for the life of the loan, thus offering stability to the borrower.

Low Funding Fees / No Private Mortgage Insurance

USDA loans have the lowest funding fees for all federal government-guaranteed mortgage products. An often-overlooked benefit of a USDA loan is that you don't have to purchase private mortgage insurance (PMI). By comparison, with conventional mortgages, you will be required to pay PMI if you can't come up with a 20% down payment. FHA loans also have significant yearly mortgage insurance fees.

With a USDA loan, you only have to pay two fees. The first is an upfront guarantee fee you only pay once when you close the mortgage. The guarantee fee is 1 percent of the total loan amount. The second is an annual fee that is lumped into your mortgage payments. It is 0.35 percent of the USDA loan's current balance.

Flexible Credit Guidelines

To get the lowest interest rates on conventional mortgage products, you require an above-average or good credit score(around 720), even though many lenders require a FICO credit score of at least 640.

With USDA loans, there is no minimum credit score requirement, meaning you can still access a zero-down mortgage with less than stellar credit. However, to qualify for USDA's automated underwriting system, which is faster and less stringent than manual underwriting, you need a credit score of 640.

Long Repayment Period

USDA direct loans allow you a 33 or 38-year period to repay the mortgages. The extended repayment period helps ensure that the monthly mortgage payments are low enough if you are a low or very low-income borrower. The USDA-guaranteed loans have a 30-year repayment term.

Millions Are Eligible

While the purpose of the USDA Rural Development program is to increase the population in non-urban areas, the definition of a rural area casts a broad net and includes many suburban areas.

This widely inclusive definition means that the vast majority of the country falls within eligible rural areas. If you are looking to purchase a home in any area in Franklin County, Florida, it probably falls within the USDA loan location footprint.

USDA Loan Eligibility Requirements – Who Qualifies?

The income limits to qualify for a USDA loan vary depending on the household size and region. The USDA determines the income limit based on the total annual income of every adult member in the household.

To qualify for a USDA loan, your adjusted annual income should not exceed 50-80% (for Direct Loans) or 115% (for Guaranteed Loans) of the area median income. Below are other USDA home loan eligibility requirements:

  • You must be a U.S. citizen.

  • You must have dependable income(two consecutive years)

  • You must be able and willing to repay the loan – no collections or late payments 12 months before your loan application

  • The home you seek to purchase should meet the USDA property requirements

  • You must have an acceptable debt-to-income ratio

The property you wish to buy with a USDA loan must be located in a rural area and have rural characteristics. Metropolitan areas are excluded from the USDA home loan program, but some suburban areas may qualify.

Also, the loan program funds owner-occupied single-family primary residences. You can't use a USDA loan to purchase a vacation home or income-generating property.

The USDA recommends debt-to-income and monthly payment limits for borrowers to prevent you from borrowing more than you can afford. With a USDA loan, your total housing payment should not exceed 29% of your pre-tax income. Also, your total debt-to-income ratio must be low(less than 41%) to qualify for a USDA loan.

Note that since a USDA loan doesn't require a down payment, you aren't required to provide proof of assets like you would with a conventional mortgage. You don't have to verify that you have a down payment or enough cash reserves during the loan application.

The USDA doesn't outline credit qualifications for direct or guaranteed loan programs. If you apply for a direct loan, you must demonstrate your ability to repay what you borrow based on your income, assets, or existing debt.

However, the lender may require a specific credit score. In some cases, if you don't have traditional credit, you can use alternative forms of credit to demonstrate your ability to pay. These options include auto insurance payments, rental payment history, or utility payment history.

Income Limits and Loan Limits for Franklin County, Florida

When determining income limits, the USDA considers adjusted annual income, which accounts for acceptable deductions such as medical expenses and child care. The base USDA home loan program income limits for Franklin County, Florida, in 2022 include:

  • 1-4 member households - $103,500
  • 5-8 member households - $136,600

Effective March 9, 2022, the maximum USDA loan limit for Franklin County, Florida, is $336 500.

Beautiful new house in Florida

How to Obtain a Zero-Down USDA Loan in Franklin County, Florida

Let's look at how to apply for USDA loans in Franklin County, Florida. The process typically involves the following steps:

Get Pre-qualified With an Approved Lender

The first step in the USDA home loan application process is pre-qualification by an approved lender. A USDA-approved lender requires a general income review and credit check to pre-qualify you.

Before applying for a USDA loan, you must know your household's monthly income and the amount you would like to borrow. Pre-approval enables you to make an offer when you find an eligible home in Franklin County.

Get Pre-approved

Pre-approval is a crucial step for a homebuyer. It provides a solid look at the loan amount you can afford and communicates to the seller that you can make good on your offer. Your lender will outline the documentation you need to verify your income qualification. Each income-earning adult member of your household must provide the following documents:

  • Pay stubs
  • W-2 forms and tax returns
  • Bank statements
  • Social security Awards letter(when applicable)
  • Photo Identification

Note that a pre-approval is not a USDA loan approval. You have to satisfy all income and credit requirements from loan underwriting. Also, the property has to pass the USDA appraisal before the department can issue the final loan approval.

Locate a Home in an Eligible Area

Once pre-approved for a USDA loan, you must find a home in an eligible area and make your offer. Your pre-approval letter shows real estate agents and sellers that you are a lender-verified buyer who can close. USDA property qualifications lie primarily in rural areas, but you can also find eligible homes just outside the metropolitan areas in Franklin County.

Underwriting and Loan Approval

Once you agree with the seller and sign the purchase agreement, the loan underwriting process begins. Your lender will order a USDA appraisal to ensure the property is adequate, safe, structurally sound, and sanitary according to USDA standards. A satisfactory appraisal confirms that the property value aligns with the purchase price.

The USDA home loan approval has two phases. All aspects of your loan must be cleared through lender underwriting first, the USDA (automatic or manual). The USDA and your lender may require additional information or documentation before final approval.

Final USDA Approval and Closing

Once the USDA underwriters are satisfied, they will approve your loan and issue a Clear to Close. You can now complete the closing process where you sign the associated paperwork, finalize your USDA loan, and take ownership of the property.

Fun and Exciting Things to Do in Franklin County, Florida

Recently, Franklin County has become a popular destination for tourism and retirement. If you take advantage of the zero down payment USDA Home Loan program to purchase a home in Franklin County, you and your family can engage in no shortage of exciting activities.

Visit St George Island

St. George Island is a pristine 22-mile barrier island in the Gulf of Mexico. The island boasts of the most serene, unspoiled beaches in Florida. St George Island offers plenty of activities to engage on for all visitors.

You can take in the natural beauty of the island by venturing out to the bay marshes and enjoying the extraordinary wildlife. The un-crowded beaches are ideal for family-friendly activities such as fishing, swimming, paddling, beach walks, and relaxing on the white sands. If you and your family feel adventurous, you can always rent a boat, kayak, scooter, or bicycle and explore the island.

The island serves an array of vacation rentals and accommodations, from luxury beach-front hotels to charming beach cottages. St George Islands also features other attractions and amenities, including a recreational park, the St George Island Lighthouse and Museum, art galleries, restaurants, charming shops, boutiques, and a pet paradise.

Family Fun at St Vincent National Wildlife Refuge

Established in 1968, St Vincent National Wildlife Refuge is part of the U.S. National Wildlife Refuge System. It is situated on the St Vincent barrier island, off the coast of Apalachicola, Franklin County's seat. Since you can only access the wildlife refuge by boat, it is often un-crowded.

You and your family can enjoy solitary beach walks or venture into the Islands' interior to explore the different wildlife habitats.

Depending on the season, you can observe many species, including soft-shell turtles, osprey, wood ducks, white-tailed deer, bald eagles, loggerhead sea turtles, and peregrine falcons. A good number of the species are threatened or endangered. Other activities you can participate in while on the wildlife refuge include boating, sea kayaking, fishing, hiking, biking, and annual hunting.

Explore Apalachicola Maritime Museum

Apalachicola Maritime Museum is a top tourist destination in Franklin County, Florida. The museum aims to preserve and celebrate Apalachicola's maritime history through the museum, educational, boat building, restoration, active sailing, and stewardship programs. Located at 103 Water Street, the museum boasts recreational and historical boat tours, ecology tours, sunset cruises, kayaking, and sailing.

The museum has several exhibitions, including The Quark, a centerpiece ketch. You can also visit the area's barrier islands. The Apalachicola Maritime Museum also restored Apalachicola Boat Works, which runs a boat restoration and building facility.

Check Out John Gorrie Museum State Park

John Gorrie Museum State Park is a fascinating museum within the historic district of the Apalachicola fishing village. Dr. John Gorrie was an early pioneer in artificial ice manufacture who moved to Apalachicola in the 1830s when the town was a significant trade, commerce, and shipping port in Florida.

When visiting the John Gorrie Museum State Park, the park staff will interpret the contributions and history of the famous resident. While at the Museum Park, you and your family can engage in geo-seeking (a fun outdoor game involving GPS devices), enjoy picnicking beneath the museum's cedar trees, visit the Gorrie memorial and gravesite, and explore the interpretive exhibits and machines.

Enjoy Alligator Point

Alligator Point is a hidden gem located on St James Island along the Gulf of Mexico. It is a small beach community on Florida's "Forgotten Coast." Fun attractions in Alligator Point include Bald Point State Park and the nearby St. Marks Wildlife Refuge.

Bald Point State Park offers exciting activities for the entire family to enjoy. The park boasts amenities such as beaches, fishing, canoeing, bicycling, hiking, kayaking, swimming, bird watching, and wildlife viewing. If you are into fishing, Alligator Harbor offers excellent fishing spots.


Overall, the USDA home loan program can enable you to achieve the homeownership dream if you don't have a high income and cannot save for a hefty down payment. Suppose you meet the income requirements and want to purchase a decent home in an eligible rural or suburban area in Franklin County. In that case, a zero down payment USDA home loan is a viable and affordable mortgage option.

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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