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

If you are looking for a mortgage to purchase your dream home in Lee County, FL, several options are available. One is the USDA zero-down payment loan available for low to moderate-income borrowers. The U.S. Department of Agriculture offers the loan and is a great financing option for first-time home buyers and repeat buyers.

The interest rate on USDA loans is relatively low compared to an FHA or conventional loan. Since this loan has a no-down payment requirement, it's an affordable option for people who don't have much money saved up but can afford the monthly payments.

If you are interested in taking out this loan to purchase a home in Lee County, FL, we have covered more below.

What is a USDA Loan?

A USDA loan is a zero-down payment, government-backed loan offered to eligible borrowers. The mortgage is used to purchase residential properties in qualifying locations, primarily rural and suburban areas. USDA-approved lenders qualify borrowers before issuing the loan. Ideally, the loan is designed for borrowers who won't qualify for conventional loan programs due to low income or a lack of down-payment savings.

USDA loans protect homeownership in underserved areas and nurture growth in suburban and rural communities. That said, there are two types of USDA loans: the USDA Single-Family Housing Guaranteed and the USDA Single Family Housing Direct Loan.

The main difference between the direct and guaranteed loan options lies with who funds the mortgage. With USDA direct loan program, the federal government (through the USDA) funds the mortgage directly. However, the guaranteed loan program is funded by private lenders, so the USDA only backs each loan against default.

The USDA guaranteed loan option is the type of USDA zero-down payment mortgage we'll be discussing throughout this article. USDA direct loan is meant for low and very-low-income borrowers earning 50-80% of the AMI (area median income). The maximum amount for USDA direct loans is also limited. This isn't the case with the USDA guaranteed loan as there is no max loan limit, while the base income limit is 115% of the AMI.

USDA Loan Qualification Requirements

To qualify for a USDA loan in Lee County, Florida, you must meet some USDA loan eligibility conditions. The mortgage is available for permanent U.S. residents, U.S. citizens, and foreign nationals planning to relocate to the property as their principal/primary residence. Below is an overview of the loan qualifications.

Income Limits

Borrowers earning at/below the USDA loan income limit are eligible for the loan. The USDA considers three types of income to determine eligibility. These are:

  • Qualifying income is the borrower's income used to determine loan repayment ability.

  • Eligibility income – refers to the total household income, including income from dependent children.

  • Adjusted eligibility income – this is the income obtained after taking deductions for childcare expenses and dependent children.

The USDA income limit in Lee County, FL in 2022 is $103,500 for households of 1 to 4 or $136,600 for households of 5 to 8. If the household exceeds eight members, each additional individual gets 8% of the 4-person income limit added towards the total.

Credit Score

Most USDA-approved lenders require a FICO credit score of 640 or higher as the base requirement for USDA loans. The higher the credit score (680 and above), the better the chances of getting a lower interest rate. Getting approved could be challenging if you have a credit score below the bare minimum. Consider applying with several lenders to increase your chances of landing a more flexible deal. Always review your credit report and correct any errors or false accounts that may be hurting your credit score.

Qualifying location

Since USDA loans are meant to boost homeownership and development in rural and suburban areas, the property's location matters a lot. Properties in metropolitan towns, cities, and counties often do not qualify. For a property to be eligible for USDA loans, it should be located:

  • In an area with a population of 10,000 or less in an open country/rural setting.

  • In an area with a population of 20,000 or less in an area that isn't a designated Metropolitan Statistical Area (MSA).

Luckily, most residential neighborhoods in Lee County meet this location criterion. If you have found a suitable property but aren't sure if it meets the location criteria, consult your real estate agent or your lender.

Property Requirements

Not all property types/sizes are eligible for USDA loans. Only single-family units, including condos, modular homes, townhomes, and manufactured homes, qualify. The property should also meet the following conditions:

  • Be a modest home of at least 400 square feet but not exceeding 2,000 square feet.

  • Be a primary residential home. An investment home isn't eligible for USDA loans.

  • Be a safe and structurally sound home with access to water and wastewater systems. The plumbing and electricity should be functional.

  • It should offer vehicles and pedestrians safe and convenient access to the property and provide living space, adequate heat, hot water, and sewage disposal.

  • Should pass USDA appraisal guidelines.

Debt-to-income ratio (DTI)

Your debt-to-income ratio is a vital mortgage qualification criterion that shows how much of your monthly income goes towards expenses. Most lenders will consider two DTI ratios: front-end and back-end DTI ratios. The front-end ratio focuses only on your new housing expenses concerning the gross monthly income. On the other hand, the back-end ratio considers all the major monthly expenses for gross monthly income.

USDA-approved lenders often want a front-end DTI ratio not exceeding 39% and a back-end DTI ratio below 41%. However, this will often vary from one lender to another, and you may qualify for a USDA loan even with a higher DTI ratio.

If your debt-to-income ratios are above what the lender requires, you can take some time to pay off some outstanding debts before applying for a USDA loan. The more debts you consolidate and pay, the lower the DTI ratio and the higher the chances of qualifying for a lower interest loan.

Waterfront homes and condos along Matanzas Pass waterways in Fort Myers Beach Florida

Obtaining a Zero-Down USDA Loan: Step-by-step

Like any government-backed mortgage, the USDA loan follows a step-by-step process from pre-qualification to underwriting and closing. We have highlighted step-by-step loan application procedures below.

Prequalify for USDA Loan with a USDA-approved lender

As noted above, using several factors, the USDA qualifies eligible borrowers for its zero-down payment mortgage. Your first step is to find a USDA-approved lender within your area who offers relatively lower rates. Before getting prequalified for a USDA loan, you need to know your household's monthly income and the loan amount you'd like to borrow.

Get pre-approved for the loan

Getting pre-approved for a USDA loan gives you an upper end while house hunting. The lender will often consider your total household income to determine the loan amount you can afford to repay. You will need to prove or verify your income source to get pre-approved. You'll need to submit relevant documentation: photo ID, W-2s, Paystubs, bank statements, and Social Security Awards, if any. It's worth noting that preapproval doesn't guarantee loan approval. This is because your loan application must go through the underwriting process and satisfy all the income and credit requirements.

Find an Eligible Home

Once pre-approved for a USDA loan, the next step is to go house hunting and make an offer. The pre-approval letter you get from your lender will show potential sellers that you are a serious buyer who's pre-approved for a USDA loan and with high chances of closing. If you are new to home hunting and the home buying process, you can find a dedicated agent who will help with negotiation and guide you through the entire process.

Proceed to the Underwriting process

The underwriting process is a critical step where the lender evaluates your loan application for the final time before approving the loan. This process begins right after you have signed a purchase agreement. The lender will often order a USDA appraisal once they receive your contract.

USDA loans go through two approval processes: underwriting by the lender and by USDA. Where the need is, the USDA or/and your lender may request additional documents or info before issuing the approval. The underwriting process can be done either manually or automatically. Manual underwriting is rare but can be used if your credit score doesn't meet the minimum of 640. Underwriting for USDA loans will often take longer than conventional loans. This is because it follows a two-step verification/approval process.


After completing the underwriting process, you'll get a home appraisal done before closing. A home appraisal is necessary to assess the property's value. This helps support the purchase price and verify that the home meets all the minimum property requirements. Your agent, if any, will coordinate with your seller and the title company to schedule a closing, i.e., date, time, and location.


USDA loans don't require private mortgage insurance (PMI) but a mortgage insurance premium (MIP). The latter is charged as a 1% upfront amount with an annual 0.35% paid in 1 to 12 installments every month. The two are different in that PMI applies for FHA and conventional loans and is higher/ more costly than the USDA MIP. And while USDA's MIP is cheaper than PMI, it is paid for the entire loan duration unless the USDA loan is refinanced to a conventional loan.

Benefits of a USDA Loan

Now that you know what USDA loans are, qualification requirements, and how to apply, below are some of its main benefits.

  • They are cheap. Zero down payment low-interest loan is a sweet deal. FHA loans require a 3.5% down payment, which can be costly. The mortgage insurance for USDA loans is also low compared to FHA loans. Generally, USDA loans are among the cheapest government-backed mortgages.

  • Accepts down payment assistance and gift funds. With USDA loan programs, you can use gift money or assistance programs to cover the closing cost. If you qualify, you can get these assistance programs through grants or forgiveness loans.

  • Accommodates several property types. Provided the home is single-unit, you can buy a condo, manufactured house, or a fixer-upper with a USDA loan. Similarly, you can use the loan to purchase a piece of land when building a new construction home.

5 Fun Outdoor Activities in Lee County, Florida

Lee County is among the top places to live in Florida, thanks to the many residential neighborhoods with welcoming locals, plenty of social amenities, and outdoor fun activities. With its strategic location from the Gulf of Mexico and several islands, Lee County is a coastal haven loved by homeowners. We have rounded up five outdoor activities to enjoy in Lee County.

Bike Riding

A bike ride is one of the best ways to enjoy your free time while exploring Lee County. Sanibel Island, located west of Fort Myers, is among the top spots for bike riding. When biking around this Island, you may anticipate seeing things like the famed "Ding" Darling National Wildlife Refuge and the historic lighthouse.

While riding, don't forget to take a break and enjoy an ocean swim or a beach picnic. On the Island's western side, along Sanibel-Captive Road, is the most extended section of bicycle trail, which can serve you well if you are a pro cyclist. There are several locations along Periwinkle Way where you can rent great bikes at affordable rates.

Kayaking or Canoeing

Canoeing or kayaking is another great way to have fun in Lee County. The Great Calusa Blueway is a kayaking route that meanders up the Caloosahatchee River and its tributaries. It also passes through the coastal waters of Lee County from Pine Island Sound to Estero Bay. The 190-mile track directs canoeists and kayakers through shallow regions away from powerboat traffic using recognizable brown and white signage.

Diverse animals are found along the Blueway, including bald eagles, white pelicans, flying frigate birds, and a half-dozen species of wading birds like herons. The other familiar sights for kayakers are river otters, manatees, dolphins, and sea turtles. If you are in for some game fish, you'll find tarpon, redfish, and snook along the Blueway. Both beginners and experienced backcountry paddlers will enjoy the trail. The other places to kayak in Lee County include the Estero River, Lovers Key, The Caloosahatchee River, and Lakes Regional Park.


Shelling refers to observing, finding, and collecting sea shells from the beach. It is one of the best hobbies in coastal areas and a fun way to explore and understand marine life. To shell on the coastal beaches and islands in Lee County, you only need a bucket or bag to put the shells in. A separate bag for the more delicate shells is often advisable. And unless you are an expert, you should have a reliable shell identification guide. The ideal shelling times are early morning, low tides, or after winds and storms.

Around 400 multicolored seashells, ranging from the ordinary scallop and clam to the exotic tulips and delicate paper fig shells, are found on the beaches around Fort Myers and Sanibel.

Explore the Lakes Regional Park

The 279-acre Lakes Regional Park in Lee County, Florida, is the perfect place to go hiking, biking, canoeing, kayaking, birdwatching, or picnicking. The Miniature Railroad, for example, offers an exciting 1.5-mile ride through a tunnel and around a portion of the lake. Children will adore the Miniature Railroad and Train Village, Rock Climbing Wall, Playground, and splash park.

During nesting season, over 1,000 birds reside in this park, plus it is home to endangered Florida species, including the Scarlet Ibis and the Black Crown Night Heron. Lakes Park is also a fantastic location to view migrating birds in the fall. This park offers free Wi-Fi, community gardens, bathrooms, and a sensory experience of plants, trees, and bushes.

Baseball Spring Training

Baseball spring training for some of the top MLB franchises, the Boston Red Sox and Minnesota Twins, is held at Fort Myers, Lee County. These major league baseball players travel to Lee County for training every February and March. If you are a baseball fan, you'll be able to cheer up your favorite players while enjoying that up-close sporting experience.


USDA loans are an excellent option for wannabe homeowners who do not have the down payment standard with FHA and conventional loans. This loan product is designed for rural and suburban areas, and the qualification requirements are not very strict. Provided you have an income that doesn't exceed 115% of the AMI and meets the other conditions such as credit score and DTI ratio; you can easily qualify for the USDA loan. Lee County is one perfect place to call home, and you'll surely enjoy the various fun activities we have highlighted above. Get pre-approved for a USDA loan today and chart your path to becoming a homeowner.

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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