Skip to content
Fact Checked by Experts

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

The high rents presently are adding more pressure to find a home. Unfortunately, the current economy does not allow most people to get their dream home simply from savings. That is where loans and mortgages come in, and some of the best are USDA loans. If you are looking to buy a home in Highlands County, Florida, a USDA loan could be the help you need.

What is a USDA loan?

USDA stands for the United States Department of Agriculture. Thus USDA loans are mortgages backed by the federal government offered through the USDA, which aim to help homeowners in rural and suburban sections of the country. They target low to medium-income earners. There are two types of USDA loans you access;

USDA direct loans

These loans are issued directly by the federal government and are for very low to low-income borrowers. You, therefore, apply these loans to the USDA directly and not through a mortgage lender.

They target people who make under 50% to 80% of an area’s median income. They also come with USDA loan limits.

USDA guaranteed Loans

These loans are issued by other lenders, but the USDA guarantees them. So, you apply them through private banks, mortgage lenders, and credit unions.

These loans target low to moderate-income homebuyers who make up to 115 % of an area’s median income. There are no loan limits for USDA-guaranteed loans, and they make the most of the USDA loans applied. This second group of loans will be the focus of the article.

Advantages of a USDA Loan

There are many loan options, so why should you consider a USDA loan? USDA loans have several crucial benefits to homebuyers, including;

Zero down payment

No down payment is the biggest attraction of USDA loans. As such, it grants significant savings upfront while minimizing the time you will take to purchase the house.

While other mortgages, including FHA loans, will require some down payment upfront, a USDA mortgage has no such requirement.

Low mortgage insurance premiums

Mortgage insurance is necessary on most low-down-payment loans, including USDA loans. The difference is in the cost. Where USDA loans further give you savings, you only need a 1% upfront guarantee fee and an annual mortgage insurance rate of 0.35%.

Compared to an FHA loan, one of the cheapest alternatives, if you have a $200,000 fixed-rate 30-year loan, you will spend $5,228 on upfront fees and the first monthly mortgage insurance premium on an FHA loan. On the other hand, you will only spend $2,708 for the exact costs of a USDA loan.

Competitive interest rates

Because the U.S. federal government backs the USDA loans, the lenders have reduced risk exposure.

They can offer competitive rates to borrowers even with zero down payment. Lower rates lead to lower monthly premiums and significant savings on the amount paid as interest in the long run.

They accept gift funds and down payment assistance

You can use gift funds from friends and family and other assistance programs to help cover closing costs or even a down payment should you want to make one.

The better part is that with USDA loans, there is no need to do the extra work of looking for, applying, or getting approved for down payment assistance unless it is your choice.

In that case, several programs are present, usually in the form of grants you do not have to pay back or forgivable loans you will not repay if you stay in the home for a certain period.

You can use USDA loans for different types of properties

The only restrictions USDA loans have on the types of properties is you cannot use them for investment properties, vacation homes, or multiple unit properties, even if you are staying in one of the units. Aside from these, you can use your loan to purchase different properties, including;

  • Condos
  • Single-family homes
  • Land if you are constructing a new home
  • Fixer-upper
  • Manufactured home

The Benefits of Working with a Zero Down Payment Mortgage

Even with the availability of 0% down payment loans, there is still plenty of insistence on having a deposit first when purchasing homes. It is based on wisdom from the past decades, where the accepted guideline was to save for depositing 20% of the value of the home you want to buy.

This approach may have worked in the past, but it is not economically sensible. Here is why you should take a zero-down payment mortgage.

The property appreciation works for you

The property market is appreciating at a faster rate than you can save. Also, the high prices of homes, while the income for most has not increased correspondingly, means it is a struggle for most to save 20 % of a house’s value.

Your 20 % is likely to end up being 15 % or lower by the time you manage to save up. On the other hand, with no down payment, you get into the house you want in a matter of months, and with consistent payments, you earn increased equity and appreciation benefits.

It reduces your risk exposure

Often, you are told that a down payment reduces the risk on your part and even attracts lower interest rates. However, USDA loans still have cheaper interest rates, and more importantly, should you not meet your obligations, you are not at risk of losing your down payment and the house.

You have extra savings for emergencies

Saving for a down payment leaves you with little or no extra funds for emergencies. It depletes your savings, and you often start from scratch once you have made it. You have no funds to use in an emergency or an excellent investment opportunity. You can preserve your savings and enjoy manageable interest rates with zero down payment loans.

You get to own a house now

The timeline of owning a house is even faster with zero down payment loans. All you need is a good credit score and fewer monthly obligations, then find an eligible property.

Even with a couple of debts, you can work on clearing them faster than you can save for 20% of a house’s value. Once you qualify, the process is fast and straightforward, saving you months of paying rent.

Realtor and young couple sitting at desk to discuss new house purchase

Steps for Obtaining a Zero Down Mortgage

Getting a USDA loan is straightforward though it may have some unique rules you will not find in other loans. It also requires USDA approval and may take some time to find an eligible home. You should therefore factor these two aspects into your plans to have a realistic timeline for when you can get into your home. Here is how you apply for the zero-down payment loan.

Start by reviewing your finances

Check your credit score and your monthly budget, and debt obligations. If the credit score is low or you have a tight monthly budget, you should work to clear some of the debt before applying. If your finances are in good health and you have a good credit score, proceed with applying for the loan.

Get pre-qualification

A pre-qualification estimates how much you can borrow from a USDA loan. You get one from a USDA-approved lender, and while it is not a guarantee that is the amount you get, it gives you an idea of the cost you can afford, so you start your search within that budget.

A pre-qualification also tells real estate agents and sellers that you are likely to afford the homes you are looking for. It is best to work with an experienced USDA lender as they close your loan on time.

Search for USDA-eligible properties

Buying a home using USDA loans requires finding an eligible property, so it is not just about what you like. If you are using a realtor familiar with the process, you should only ask to see qualified properties as it will save time. Working alone, you can use a USDA-eligible map from the department’s website.

Make an offer

Once you are pleased with the property and are sure it is eligible, you can submit your offer. It helps to work with an experienced realtor as they guide you through crafting an attractive offer that the seller or agent will accept.

Arrange for an appraisal and inspection

You should notify your lender when your offer has been accepted to that they can schedule an appraisal, as that is their duty. You are responsible for an inspection, and ideally, you should do it before the appraisal as it will help you learn early enough if the house is suitable and will pass the appraisal.

Provide further verification as requested

At this stage, the lender will need to verify your financial position further and determine the amount you will borrow. You may be asked to provide further documents like tax forms, employment records, and bank statements. Comply with the request promptly to avoid jeopardizing your closing timeline.

Wait for approval from the USDA

On top of you looking for qualified property and going through a property appraisal, the USDA has to check off all its loan applications. By going to the USDA rural development website and checking under Loan status, you can get an idea of whether your application is among the batch currently under review.

Plan for closing and funding dates

The closing date is when you get to sign the loan documents, the funding date is when the money is transferred to the seller, and you officially own the home. Work with your lender to know when the closing date will be and the funding date which is usually two days after the closing date.

Settle into your new home

With all the transfers done and you have the property title, you can now move into the home, settle and start customizing it as you deem fit. You are a new homeowner.

Top Outdoor Attractions of Highlands County, Florida

Highlands County may not have the theme parks and beaches like other areas in Florida, but it still has numerous options for outdoor fun. Here are some of the best outdoor activities you can explore in Highlands County.

Visit the museums

Highlands County is a haven for museum lovers. They are dotted all over the county, preserving rich heritage. Some unmissable ones include the Museum of Florida Art and Culture, which is part of the South Florida State College campus in Avon Park. The museum features art and artifacts that pay homage to Florida.

The Children’s Museum of the highlands is also an appealing play and learning location for children from one to twelve years, located within Lakeshore Mall.

Next is the Florida Civilian Conservation Corps, a dedication to the workers who helped create state and federal parks. Another of the many museums to check out is the Military Sea Services Museum which honors the three military branches serving on the water, including the Coast Guard, Marines, and the Navy.

Take part in the festivals

For more fun and activity, you can participate in various festivals in highlands county. They range from art and music to food festivals. Popular ones include; the Sebring Art, Wine & Jazz Festival, which is held every November, and the Caladium Festival at Lake Placid, the Caladium capital of the world. The festival celebrates the plant and includes tours covering 1500 acres of fields.

It runs from July 27-July 29 and also features a car and bike show, food, entertainment, and a 5K race. Other festivals include the Highland Art League Cookiefest in December, Highlands Bike Fest cycling tour in December, the Blueberry & Bluegrass Festival each April, and the U.S. Sport Aviation Expo at the Sebring Airport in January.

Explore the parks

Highlands County has something for everyone if you love hanging out, taking to the trails, having a picnic, or want some time in the open nature. One of the best parks in Highlands Hammock State Park, which is also one of the oldest Florida parks. It has dozens of trails for hikers and bikers and stretches across 9000 acres.

You come here to enjoy the greenery and canopy thanks to the hardwood hammock, the pine Flatwoods, and the cypress swamp. You can also find oaks that are several thousand years old.

There is also the Lake June-In-Winter Scrub Preserve State Park, which is one of the state’s newest parks. It was established as a preserve for the sand scrub. It is also home to the Eastern indigo snakes, the Florida mouse, the Florida scrub lizard, the gopher tortoise, and the rare Florida scrub jay.

There are parks around the county to visit, including the Archbold Biological Station, where you can learn more about Florida black bears and other unique Florida wildlife. It is an exciting place for those keen on ecological conservation efforts or to take a tour across the 9,000 acres of Florida scrub.

Enjoy wine, beer, and soda

There are plenty of opportunities to sample some of the best drinks in some scenic sites. First, there is the Sebring Soda Festival, which happens in April every year and offers over 200 craft sodas to sample. There are also festive food trucks, live music, a beer garden, and family fun.

If you miss the festival, you can always head to the Sebring Soda & Ice Cream Works, which stock over 200 bottled sodas from all over the globe. They also have plenty of dessert options and gourmet hot dogs for a complete meal.

If carbonated drinks are a touch too extra, you have the Henscratch Farms Vineyard and Winery in Lake Placid or the Secret Gardens and Winery Farm for some of the best wines in Florida and farm tours. For some of the best beer and dining, you can head to Faded Bistro and Garden, complete with a hammock.

The Sebring International Raceway

In March, you can celebrate the most international event in the county and much of Florida, the 12 Hours of Sebring. It is an annual motorsport endurance race held at the Sebring International Raceway and is part of the American Le Mans Series. You can come and witness the excellent skill and some of the best-tuned race cars featured in the world-famous 24 hours of Le Mans.

The race serves as a preparation for the 24 hours of Le Mans. It also serves as part of other motorsport championships like the IMSA GT Championship and occasionally the FIA World Endurance Championship. You are thus assured of all-around fanfare, thrills, and excellent family time.

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!