(Mar 30, 2023)
Whether landing a trophy fish or simply enjoying the relaxing view of the lake, you'll fall in love with Okeechobee. And lucky for you, buying a home in Florida counties has been easy, thanks to USDA loans. So, if you can't cover home costs due to low income, you can apply for USDA loans and get your zero-down mortgage.
Read on to learn more about how you can obtain a zero-down mortgage in Okeechobee County, Florida.
Are you a Hometown Hero? Find out your eligibility for the Hometown Heroes Loan Program in Okeechobee County, Florida.
What is a USDA Loan?
As the name suggests, a USDA loan is a type of loan backed by the USDA (U.S. Department of Agriculture). It's specially tailored for potential low- to moderate-income homebuyers who want to buy homes in rural areas.
The primary purpose of USDA loans is to offer affordable homeownership to low and moderate-income families to stimulate growth in suburban and rural communities throughout the United States. Generally, these rural development loans are available in about 97% of the nation's landmass. According to the Housing Assistance Council, this includes over 100 million people.
Benefits of USDA Loans
Because of the government's loan guarantee, lenders are now willing to take on more risks and offer qualified borrowers advantageous terms and rates.
Some of the primary benefits of using USDA loans include:
Low Private Mortgage Insurance (PMI) Premiums
With a conventional loan, lenders will need you to pay PMI if you don't pay a 20% down payment. And you'll also have to pay high annual mortgage insurance fees.
On the other hand, USDA loans don't have Private Mortgage Insurance. Instead, the U.S. Department of Agriculture uses two charges: an upfront guarantee fee that you pay once you close on the mortgage, and an annual fee, which gets included in your monthly mortgage payment. The annual fee is only 0.35% of your loan's current balance, and the upfront fee is 1% of the total financed amount.
Zero Down Payment
Of the many advantages of using a USDA loan, the most cited is the opportunity to receive 100% financing without spending several years trying to save for a down payment. Along with a VA loan, a USDA loan is one of the few remaining $0 down payment government-backed mortgage options out there.
Lower Interest Rates
Due to the government guarantee, lenders are comfortable offering some of the lowest rates on the market. While the actual interest rates will vary depending on your lender and other contributing factors, keep in mind that your current market conditions and credit profile play a pivotal role in your mortgage rate.
Flexible Credit Guidelines
Most conventional lenders usually insist on having a credit score of not less than 640 before applying for a mortgage loan. And some lenders will even demand something closer to 720 to offer you lower interest rates.
Fortunately, there are no minimum credit scores for USDA loans. Potential homeowners with lower FICO scores can still qualify for the loan using manual underwriting. But you need to score 640+ to qualify to use USDA's automated underwriting system.
Millions Are Eligible
The vast majority of borrowers in the United States are within what the USDA considers a qualified rural area. While the primary goal is to boost population and development in non-urban areas, the U.S. Department of Agriculture's definition of rural and suburban areas casts a broad net.
They define a rural area as any region with a population of not more than 35,000 people. An estimated 97% of the country could qualify for USDA loans.
Types of USDA Mortgage Loans
The United States Department of Agriculture offers three types of mortgages for homebuyers in rural and suburban areas. Here's a breakdown of each:
Direct USDA Loans
The U.S. Department of Agriculture funds borrowers of Direct USDA loans directly. In other words, USDA becomes your lender instead of a bank and other third-party lenders. This loan is specially designed for low-income and very-low-income borrowers who can't access other types of financing to purchase an adequate residence. Qualifying Americans' income must be within the low-income limit in a designated region as defined by USDA.
Do I Qualify for USDA Direct Loans?
To qualify for Direct USDA loans, your adjusted income must fall below or below what the U.S. Department of Agriculture considers "low income" in the region you want to buy a home. On the same note, you must meet the following requirements as specified by the USDA:
-
Be a U.S. citizen, qualified alien, or permanent resident
-
Be unable to secure financial assistance from other sources on terms you can't reasonably meet
-
Not be debarred or suspended from participation in federal programs
-
Be without a decent, safe, and sanitary home
-
Have the legal capacity to incur loan obligations
- Agree to live in the house for a primary residence
Since USDA loans are specially geared toward very low-income borrowers, you must at least demonstrate a good credit history. You can still apply for the loan if you don't have an official credit history, though a 640 FICO score is typically required. However, you'll have to demonstrate a satisfactory financial standing with non-traditional credit sources like timely utility payments.
Guaranteed USDA Loans
USDA usually partners with local lenders, such as banks, to offer Guaranteed Loans. Guaranteed means that USDA guarantees a portion of your loan if you default on the mortgage. So, these lenders will feel comfortable offering modest mortgage terms to low-income borrowers with less-than-favorable credit scores.
Guaranteed USDA loans typically suit low to moderate-income borrowers. Generally, household income includes the combined income of the borrower and every adult in the household, irrespective of whether their names appear on the loan application. If you're planning on using this loan to buy a home in Okeechobee County, your adjusted household income shouldn't exceed 115% of the county's median family income.
Do I Qualify for Guaranteed USDA Loans?
To qualify for Guaranteed USDA Loans, borrowers must meet the following requirements:
-
Agree to set the home as a primary residence
-
Have income at or below the specified "low" income in the region you intend to live in
-
Be a U.S. citizen, qualified alien, or a U.S. non-citizen national
-
Have the legal capacity to incur loan obligations
-
Buy a home that meets all program criteria
- Show the willingness to meet credit obligations on time
A credit score of 640+ usually helps eligible borrowers secure reasonable rates for Guaranteed USDA Loans with zero down payment. A high score will reward you with an automated or streamlined application process.
You can still qualify for Guaranteed USDA Loans if your score falls below the 640 margins or if you lack a credit history. However, your interest rates won't be as favorable.
Applicants with no traditional credit history can still qualify for these loans. However, they'd have to support a dependable financial standing through evidence such as timely tuition or utility payments.
Additionally, USDA-backed lenders usually prefer working with individuals whose accounts haven't been transferred to collection agencies within the last 12 months. If you've experienced such issues or bankruptcy, you'll need to present relevant documentation.
USDA Home Improvement Loans
These loans help low-income borrowers repair or enhance their properties. Depending on your circumstances, the U.S. Department of Agriculture may combine this loan with other grants you don't have to pay back.
Do I Qualify for USDA Home Improvement Loans and Grants?
The United States Department of Agriculture is also in charge of the Housing Repair Loan & Grants program, helping very low-income borrowers improve their properties in USDA-designated spots.
Eligible borrowers 62 years or older can use grants of about $7,500 to remove dangerous materials from their homes. To qualify, you must meet the following requirements:
-
Be unable to receive affordable credit elsewhere
-
For grants. be aged 62 years or older and unable to repay any repair loan
- Have a family income of below 50%
Who Can Apply for USDA Loans in Okeechobee County
USDA loans open doors to homeowners for many first-time buyers who otherwise couldn't afford a traditional 5-20% down payment.
But remember that USDA also has its requirements and guidelines, including eligibility requirements for both the property and the homeowner. Lenders often set their requirements and policies in addition to those specified by the USDA.
USDA Loan Eligibility
To qualify for USDA loans in Okeechobee County, you must meet income and credit criteria set forth by the USDA and the lender. At a minimum, the USDA requires:
-
Reliable income, typically two consecutive years
-
U.S citizenship or permanent residency
-
The ability to repay your loan - no late collections or payments 12 months before the loan application
-
The home be located in a qualified suburban or rural area
-
Your adjusted annual income shouldn't exceed 115% of the county's median income, based on family size
- An acceptable debt ratio - this will vary by lender and other factors
Property Eligibility
USDA loans come with many benefits, but not all properties are eligible. For your home to be financed by USDA loans, it must meet the set minimum property standards. This ensures you get a fully functional, safe, and good home to raise your family.
You can only use USDA loans when the home is your primary residence. You can't use this program to buy vacation houses or second homes in Okeechobee County.
Aside from being your primary residence, your property also needs to meet the following requirements:
- It needs to be structurally sound
- It must be accessible
- It must have functional electric, heating, and cooling systems
- It needs functional doors and windows
- It must have adequate roofing
- It must have access to water
Remember, income-producing homes are ineligible for USDA home loans. If your property has a livestock facility, greenhouse, or a barn that's no longer commercial use, it may qualify. Consider discussing this situation with a certified USDA lender to be sure.
Home Location Requirements
A USDA loan is only available to an individual wishing to buy in what the U.S. Department of Agriculture considers a rural area. However, some homes in suburban regions may be eligible as well. According to the USDA, a qualified rural area is an area:
-
With a population of below 35,000
- Rural in character and has a lack of mortgage credit for low- or moderate-income families
Moreover, USDA loans are only available to borrowers wishing to buy a single-family home and make it a primary residence. Properties with acreage may qualify if the site size is standard for the region and not used for income-producing purposes.
Minimum Credit Score
The USDA doesn't set minimum credit score requirements, but most lenders will need a score of at least 640. This is the minimum score you need to qualify for automatic approval through the USDA's GUS (Guaranteed Underwriting System).
GUS is USDA's automated underwriting system, which automates the entire credit risk evaluation process. While you can qualify for financial assistance with a score below 640, your files will require manual writing.
Income Requirements
Since USDA loans are geared toward assisting low and moderate-income borrowers, the USDA sets income limits depending on the household size and the home's location. The base USDA loan income limits are:
- $103,500: 1-4 member household
- $136,600: 5-8 member household
USDA usually counts the gross annual income of all adult members in a household towards the income limit, irrespective of whether they're part of the loan or not.
Remember, this isn't as simple as checking your annual pay. The USDA will ultimately look at what it refers to as adjusted annual income, which considers acceptable deductions for things like medical expenses, child care, and more.
Is Using USDA Loans to Buy a Home in Okeechobee County, FL, a Good Idea?
Okeechobee is a perfect place to live. It ranks well in crime, diversity, cost of living, and education. It truly has something for every homeowner, and that's why it's an ideal place to call home.
So, if you're considering purchasing a home in Central Florida, you'll never go wrong with investing in Okeechobee County. Below are 5 things to do in Okeechobee County, Florida.
Bass Fishing
Lake Okeechobee is the undisputed champ of bass lakes worldwide, producing mammoth fish yearly that usually top the scales at more than 10 pounds. If you stay in Okeechobee, this lake will keep you and your family the outdoors, fishing and enjoying its scenic beauty.
Catch a Baseball Game at the First Data Field
Baseball lovers that happen to be in Florida during the spring training period have an opportunity to participate in preseason games between baseball teams from all over the country.
In Port St. Lucie, Fast Data Field was constructed in the late-'80s as New York Mets' spring training home. This state-of-the-art stadium can hold over 7,000 spectators in comfort. Enjoying a hot dog and a bottle of beer as you catch a game or two won't need a second mortgage as it will in many big-league stadiums.
Attend the Vero Beach Wine and Film Festival
Movies and wine go hand in hand like jelly and peanut butter, and for lovers of cinema and intoxicating drinks produced from grapes, there's no better place to be than Okeechobee County. Here, you get to attend an annual event that's captivating and fun for various interests and ages.
This three-day event usually takes place in the middle of June and features various cultural, social, and artistic events. Other activities include food events sponsored by local caterers and restaurants and many movie showings, dancing, and family-friendly activities.
Pelican Watching at the Pelican Island National Wildlife Refuge
This wildlife refuge is among the oldest of its kind in Florida. It's open to nature lovers daily from morning to sundown.
As its name suggests, the refuge is well-known for the many pelican species that call it home. It's common to see sea turtles, dolphins, and manatees in the waters surrounding this National Wildlife Refuge.
Dine at the Lightsey's Seafood Restaurant
Okeechobee isn't a coastal town, but it sits along the coastline of the state's largest lake. That's why its restaurants are well-known for offering visitors a wide variety of saltwater and fresh dining options.
Located on SW Parrot Avenue, Lightsey's Seafood Restaurant specializes in cooking and serving unique delicacies with fresh local ingredients. The restaurant offers non-seafood dishes like steaks, chops, salads, and delectable desserts such as key lime pie. Turtle, catfish, and even alligator dishes are popular menu items here.
Apply for a USDA Loan Today!
If you've settled your mind on buying a home in Okeechobee County, USDA loans may help you make your dream a reality. Don't let your low or moderate income prevent you from becoming a homeowner in this beautiful county. Apply for a USDA loan today and join the thousands of Floridians who've used USDA Rural Development Loans to achieve their homeownership dreams.
(Mar 30, 2023)
