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

If you’re planning to buy your first home but are struggling to raise the down payment, you are not alone. As property prices continue to rise in many parts of the U.S and the world, prospective home buyers often find it challenging to achieve their dream of homeownership due to high upfront fees. Fortunately, USDA offers a great solution thanks to its zero down payment loans.

USDA loans are, by definition, designed for prospective homebuyers who are looking to buy homes in places designated as “rural” by the U.S government. These loans are not offered directly by the USDA but rather by lenders approved by the USDA.

Since the government insures USDA loans, lenders are generally more willing to offer better terms to applicants for these loans.

For instance, you might be qualified for a USDA loan even if you don’t have a credit history or your credit score is not very good. This makes these loans particularly favorable for low to median-income households.

This complete guide will explore all the features of USDA loans, including their eligibility requirements, advantages, and how to qualify for one in Osceola County, Florida. So, without much ado, let’s jump right in.

What Are USDA Loans?

USDA loans are essentially zero-down-payment mortgages designed to provide home finance assistance to individuals living in rural and suburban. These loans are often less expensive than FHA or conventional loans since they offer low-interest rates and do not require mortgage insurance.

First-time and repeat purchasers are eligible for these loans as long as they meet the minimum income and credit requirements. That said, USDA-financed properties must be in rural areas and serve as the owners’ primary dwelling.

The USDA usually evaluates whether or not a region is rural depending on its population. Consequently, many people living near large cities often assume they are automatically unqualified for these loans. But this couldn’t be further from the truth. The USDA regards many suburban areas near large cities as rural. For this reason, you can still qualify for a USDA loan if you live in an area with a sizeable population.

It is worth noting that USDA loans aren’t the only zero down payment loans available to prospective homebuyers in the U.S. Just like USDA loans, VA loans do not require a down payment. However, while USDA loans are open to homebuyers from all backgrounds, VA loans are meant explicitly for active military service members and veterans.

Another thing to remember is that even though USDA loans require no down payment, several overhead costs are associated with processing the loan. For instance, when applying for the USDA loan, you will be charged a one-time fee equivalent to 1% of the mortgage value. This fee is equivalent to 0.35% of the mortgage value. However, you don’t need to pay it all at once, but will be required to pay it as part of the total repayment of the loan. In addition to this upfront payment, you will be required to make small monthly payments to help cover the operational costs of the USDA program.

Despite these costs, a USDA mortgage loan is still considerably more affordable than other popular loan options, like FHA and HFA loans. This is mainly because these loans do not require a down payment, and the mortgage insurance levied is minimal. Buying a home through a USDA mortgage is ultimately the most affordable way to achieve homeownership.

As highlighted initially, most USDA loans are not offered directly by the USDA but instead disbursed by approved banks and lending institutions. Nevertheless, the U.S government insures these loans and incentivizes lenders to offer them to borrowers at much more favorable terms than they would get with other popular mortgage products.

Advantages Of USDA Loans

Loan packages that promise a lot but deliver little abound in the mortgage industry. However, USDA loans have appealing features that help alleviate the stress of obtaining a house loan. Here are some reasons why getting a USDA loan might be the right decision when buying a home in a rural or suburban area.

No Down Payment Required

USDA loans typically allow potential homeowners to receive 100 percent home financing without saving for a down payment for years. This makes this government-backed mortgage one of the market’s only two $0 down payment mortgage alternatives, the other being VA loans.

Favorable Interest Rates

Since USDA loans are government-insured, lenders are often willing to offer prospective homebuyers favorable terms, including a low-interest rate, regardless of their credit score. In contrast, the market and the borrower’s credit score set interest rates for traditional loans.

Less Stringent Lending Guidelines and Requirements

USDA loans allow prospective homeowners with blemished or limited credit histories to qualify for home financing assistance. So, even if you have no credit, you may be deemed eligible if you are willing to settle their obligations. You can submit documentation such as rent, utility, and insurance payments.

Lower Mortgage Insurance Premiums

Like other low-down-payment mortgage programs, the USDA mortgage program has mortgage insurance requirements. However, unlike FHA and conventional loans, USDA mortgage insurance costs are pretty modest, saving you a lot of money in the long run.

Gift Cards and Other Forms of Down Payment Assistance are Accepted

You can utilize gift cash or an aid program to pay for your down payment if you make one. Usually, the gift donor will hand you monies without expecting you to return them.

The USDA loan program does not require you to discover, apply for, or be accepted for down payment or closing cost assistance. Even so, the program allows you to access various aid programs if you need to.

How To Qualify For The USDA Home Loan Program

To be eligible for a USDA Home Loan, you must be a citizen or permanent resident of the U.S. Additionally; you need to express your intention to use the home as your primary residence.

There are several other qualifications that you must meet to be approved for the loan. These include:

Income Limit

When qualifying you for a USDA loan, lenders typically assess your income to assess whether it meets the threshold required to be approved for the loan. To qualify, your gross income must equal to or less than a given limit.

As a rule of thumb, you must have an adjusted income of 115 percent or less of your area’s median income. Furthermore, mortgage lenders examine your qualifying income, eligibility income, and adjusted eligibility income when determining your income eligibility.

Your qualifying income determines your capacity to repay the mortgage, but your eligibility income (also known as household income) determines whether or not your qualify for the USDA program.

Credit Score Requirements

While the USDA Home Loan Program doesn’t place a premium on an applicant’s credit score when approving them for a loan, having a good credit score can be advantageous. For instance, if you have a credit score of 640 or more, you will automatically be eligible for the loan through the USDA’s automated underwriting system.

If your credit score is less than 640, you can still qualify for the loan. The only difference, in this case, is that your application will be underwritten manually, which can lead to more scrutiny and possibly more stringent eligibility requirements.

DTI Requirement

To be approved for the USDA loan program, you must have a debt-to-income (DTI) ratio of 41 or less. This means that you must not spend more than 41% of your monthly salary on debt payments. Nevertheless, you can still qualify for the loan if you have a higher DTI, although you might be subject to stricter guidelines depending on your lender.

Location and Property Requirements

As previously stated, the USDA Home Loan Program is designed to help prospective homebuyers to purchase primary residences in rural areas. While the term “rural” might seem too exclusive to certain areas, in the true sense, the USDA uses the term reasonably loosely, which means that suburbs close to large cities can still be eligible for the program.

Here is a general overview of areas that may be considered “rural” according to the USDA guidelines:

  • Any region with a population of not more than 20,000 residents that is not part of a Metropolitan Statistical Area

  • Any region with few mortgage opportunities targeting low to medium-income earners

  • Any area with a population of 10,000 or less with a rural or open country “feel.”

In addition to meeting the basic location requirements, you must also satisfy the property requirements stipulated for the USDA loan. Some of the property types that can be purchased via USDA loans include townhouses, condos, single-family dwellings, and modular homes. However, for a property to be considered eligible, it must meet the following requirements:

  • It must serve as your primary residence

  • It must be between 400 - 2000 sq ft

  • It must pass all of the USDA’s property appraisal guidelines

  • It must be a safe and secure structure with basic amenities such as water, electricity, and plumbing, as well as driveways and roads, to facilitate vehicle and pedestrian access

  • Its acreage must not be large enough to be subdivided or converted to a commercial property.

Twin Oaks Conservatory at Lake Tohpekaliga in Osceola County Florida

Top 5 Things To Do In Osceola County, Florida

The quaint county of Osceola is located in Central Florida and is included in the Orlando-Kissimmee - Sanford Metropolitan Statistical Area. Its county seat is the city of Kissimmee, characterized by its proximity to the numerous parks the region is famous for, including Walt Disney World. Even so, Osceola County offers much more than amusement parks.

If you’re looking to buy a home and settle here, you will find no shortage of exhilarating outdoor activities to engage in. Here are some of the top things to do when living in Osceola County:

Take a Trip to the Museum of Military History

The Museum of Military History in Kissimmee honors all the people who have served in the United States Armed forces in some of the most defining periods of the nation’s history. Its primary objective is to guide visitors through what it was like to serve in the military during some of the most significant conflicts, including the first and second World Wars, the Korean War, and the Vietnam War.

Some of the displays here include military memorabilia such as uniforms, weaponry, and vehicles, as well as numerous pictures and oral and written accounts of soldiers who spent time serving the nation overseas.

It is worth noting that the Museum of National History is a relatively recent venture, having opened in 2012. However, since its establishment, it has seen a considerable increase in exhibits as more people donate artifacts and funds to support its mission.

Enjoy Breathtaking Sights and Sounds of Nature at Lake Tohopekaliga

Lake Tohopekaliga, also known as Lake Toho, comes from a Seminole Indian phrase that translates to “we shall meet here together.” And just as its name suggests, Lake Toho provides the perfect opportunity to commune with nature and enjoy the wonders of the great outdoor.

This massive 20,000-acre lake is internationally known for the quality of its bass fishing, with several marinas lining its shore. There is also a diverse array of wildlife to experience here, including gators, waterfowl, and otters.

Lakefront Park on the north side of the lake offers a lovely hiking trail open to pedestrians as well as sun loungers, chairs, grills, bathrooms, and picnic shelters in case you want to have a family gathering or picnic. It also features a playground and splash area where the kids can enjoy some playtime.

Indulge Your Love For Adrenaline at Extreme Jet Ski of Orlando

If you’re looking for an exhilarating water sports experience in Osceola, look no further than Extreme Jet Ski of Orlando. This business is well-known for providing high-quality jet ski rentals and professional yet fun and light-hearted coaching on proper jet skiing.

Some of the brands represented in the company’s assortment of jet skis include Seadoo, Honda, and Yamaha. You’ll be amazed at how fast these water skis can zip over the surface of the vast, tranquil lake. While these are all super fast jet skis, the massive lake offers riders ample room to accelerate without encountering any safety issues.

Besides its impressive catalog of top-rated jet skis, Extreme Jet Ski also rents kayaks, paddle boats, fishing boats, and fishing equipment. So, you are more than covered if you’re planning to enjoy some relaxing time on the lake. The staff at this establishment are amiable and always on hand to assist you with anything you might need to ensure you have a great experience.

Get Up Close and Personal With Some Fierce Reptiles at Gatorland

Gatorland is a Kissimmee-based wildlife preserve and amusement park known for its laudable wildlife conservation work. It is home to thousands of alligators and crocodiles, including four rare “white” alligators. Viewing from a boardwalk or observation towers in a natural breeding swamp. The park also hosts educational events and other programs, including reptile exhibitions, a petting zoo, and an aviary.

Some of Gatorland’s latest attractions are two ziplining circuits. One of the ziplines is 1,200 feet long that takes riders over an alligator pool. This is popular with more daring thrill-seekers who aren’t afraid of injecting a little sense of danger into their visits. The other zip line is much shorter but accessible to people for whom mobility might concern.

Enjoy Some Nightlife Partying At Old Town

Old town is worth visiting if you’re searching for a colorful alternative to the amusement park atmosphere. Contrary to what its moniker suggests, Old Town is a vibrant shopping district with bars and restaurants at every corner. It is dubbed “Old Town” because many of its establishments are decorated with laid-back, old-school motifs.

Nevertheless, Old Town’s distinctive setting makes it ideal for strolling around and soaking in the sights and sounds of the city. The district also regularly hosts events throughout the calendar year, including car shows you can watch or participate in.

In Closing

If you’re considering purchasing a property in Osceola County, Florida, qualifying for a USDA loan is one of the best options. Aside from receiving 100% financing, you will only be needed to pay low monthly premiums, making the entire home-buying process more affordable. So, if you’re ready to buy a home in a rural-designated area in Osceola, start shopping for a USDA mortgage today.

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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