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

Are you considering owning a home but lacking sufficient cash for a down payment? The truth is, you can buy your dream home with zero down payments, thanks to USDA loans. Not only that, USDA loans offer 100% financing, convenient loan limits, and lower mortgage insurance rates, making them the best substitute for conventional mortgages.

Read on to understand how to obtain USDA loans in Florida, eligibility criteria, and other benefits not found in conventional loans.

USDA Loans - An Overview

USDA loans are government-backed lending programs for low-income borrowers who would wish to own homes in areas with a less dense population. Typically, these include rural and suburban parts of different counties across America.

USDA loans originate from the US Department of Agriculture and are available at approved financial institutions. In addition, the loans have a fixed interest rate and loan term, usually spanning 30 years.

Whether you are a first-timer or a repeat borrower seeking to buy another property, you can obtain a USDA loan provided you meet the eligibility criteria.

Eligibility Criteria

The eligibility criteria for USDA loans are similar to conventional mortgages, except that you'll enjoy more flexible terms.

Generally, you can obtain a USDA loan if;

  • You are a US citizen.
  • You are a foreign national.
  • You are a permanent resident of the country.
  • You don't meet the strict terms of a conventional mortgage.

In addition, the following vital factors play a significant role in determining your eligibility for a USDA loan;

Qualifying Location

The Department of Agriculture issues these loans with a significant focus on rural and suburban development. It is, therefore, advisable to check if your dream home is located within a USDA qualifying area before applying for the loan.

For this reason, you can get a USDA loan only if you wish to own property in any of the following areas;

  • An open country or rural area with a population not exceeding 10,000 people for each square mile.

  • An area not situated within a Metropolitan Statistical Area with a population not exceeding 20,000 people for a square mile.

  • An area with low or moderate-income earners who lack mortgage opportunities.

If you're unsure your dream home falls within the qualifying areas, you can type the home address in the interactive eligibility map and search its location.

Income Limit

Unlike conventional mortgages, USDA loans aim to allow low and middle-income earners to own homes. Therefore, most lenders will only consider your income to determine your loan limit.

Lenders will look at three main income types - Qualifying Income, Eligibility Income, and Adjusted Eligibility Income.

  • Qualifying Income - The lender will evaluate your income to determine if you can pay monthly deductions for the loan. Most importantly, lenders will consider your overall income and future mortgage repayments.

  • Eligibility Income - Lenders may consider your total household income, including what your children and spouse earn. For instance, if you live with your spouse and adult children working, the lender will combine all household members' incomes to determine if you qualify for the USDA loan.

  • Adjusted Eligibility Income - Lenders can deduct all your household expenses to determine your eligibility for a USDA loan. For instance, if you pay child care expenses, financiers may deduct up to 100% of your child care expenses. After deduction of all the relevant expenses, lenders will calculate your borrowing limit based on your residual income.

Credit Score

The US Department of Agriculture doesn't have a minimum limit for the credit score required to obtain the loan. However, most lenders require a score ranging from 620-640. So, you have a higher chance of getting the loan if your score doesn't fall below 620.

Some lenders may also scrutinize your credit history to check if you've defaulted on other loans in the past. Therefore, if you have a lower credit score, considering different quotes from multiple lenders pays off to increase your chances of getting a loan.

Debt to Income Ratio (DTI)

Your DTI is the ratio between your total monthly expenses and gross income. To determine your DTI, your financier will add up all your monthly debts, including outstanding loans, and divide the debt bill by your monthly income. Generally, your DTI shouldn't exceed 41% to qualify for a USDA loan.

Benefits of Getting a USDA Loan

USDA lending programs offer many benefits that make lending easy while enabling you to save extra cash for other needs. Here are some benefits you'll enjoy by taking a government-backed loan from the Department of Agriculture:

Zero Down Payment

A government-backed home loan's most significant advantage is the down payment exemption. The USDA-backed program requires no upfront payment for a deposit to obtain the loan. Therefore you can occupy your dream home as soon as you get your financing, leading to a shorter buying timeline.

Low-Interest Rates

Since the loans are government-backed, the risk of financial losses incurred by lenders is lower; hence they charge lower interest rates. With a lower interest rate, you have the assurance of paying lower monthly premiums and less interest throughout the loan.

Lower Insurance Premiums

USDA loans require an annual payment for mortgage insurance, but unlike conventional loans, the rates are lower. Therefore, you can save substantially on your insurance fee.

For instance, while you'll pay an annual insurance fee of 0.35% on a USDA loan, a conventional loan would require at least 0.85% for the same mortgage insurance.

Financial Assistance for the Closing Costs

Government-backed USDA lending provides financial assistance to help cover your closing costs or down payment if you need any. You can obtain gift funds and grants upon application to help you offset the costs. And what's more, gift funds and grants do not require you to pay them back.

Acquire Different Types of Property

USDA loans allow you to buy various property types, depending on your choice. You can buy undeveloped land, condo, single-family home, fixer-upper home, or a manufactured home.

USDA Loan Limits

The US Department of Agriculture doesn't have a borrowing limit for its guaranteed lending program. Thus, you can borrow any amount depending on the price of your dream home.

However, direct loans have a borrowing limit, and most lenders will use several factors to determine an approved amount you can afford to pay. For instance, your qualifying income will reveal if you'll have extra cash to pay your mortgage at the end of the month.

Does a USDA Loan Require Mortgage Insurance?

The USDA charges an annual fee on your existing loan amount for mortgage insurance. The fee protects your financier and the Department of Agriculture against unforeseen losses if you can't repay the loan.

Generally, the mortgage insurance includes two payments; a one-off payment of 1% of the total loan and an annual payment of 0.35% of your outstanding loan amount.

You may pay the upfront fee through cash, gift funds, or other external contributions. In addition, you can pay the annual fee in monthly installments each time you settle your loan repayment.

The mortgage insurance premium for USDA loans lasts for the duration of the loan until you accumulate at least 20% of your home equity.

Happy woman showing house keys after moving to new home

What Are the Property Requirements for USDA Loans?

The USDA has stringent conditions for the type of home or property you can acquire using the loan. Your dream home must;

  • Be your primary residence.
  • Have a safe structure.
  • Have efficient plumbing and electrical works.
  • Have ready access to clean water and sewerage systems.

Before buying the home, you should hire an appraiser to assess its condition and determine if you'll need any repairs. If the home requires repairs, you can cater to the repair costs and agree on a discounted purchase price before closing the loan. Alternatively, depending on your agreement, the seller could cover all the repair costs.

In addition, USDA-backed homes must meet the following guidelines;

  • The home should be decent and fit for residence only.
  • The size of the home should be between 400-2,000 square feet.
  • The acreage shouldn't be expansive to allow subdivision or commercial gain.

How To Apply and Get Approved for a USDA Loan in Wakulla County, Florida

Navigating the application and approval process is usually easy if you meet the USDA guidelines and property requirements. Most steps are similar to getting a conventional loan, with only a few rules worth noting.

Below are steps you should follow when applying for the loan:

Review Your Financial Status

It is advisable to review your income, debt burden, and credit history before your application. If you have a lower credit score due to many debts, consider paying some debt before proceeding. Similarly, if you have a negative credit report, you may negotiate with previous lenders to review your lending history.

Obtain Loan Pre-qualification

A USDA-approved financier will help you determine how much money you can borrow based on your current financial information. Although a pre-qualification is not a guarantee for getting the loan, it helps you look for a home that suits your financial needs. When choosing a financier, ensure they understand the USDA protocols and have vast experience processing USDA loans.

Identify a Suitable Property

You can approach a real estate agent to help you find a property that suits your dream home. The underlying factor is to ensure your preferred home is eligible for the USDA lending program and meets all the minimum property requirements.

Submit Your Proposal to the Seller

Once you identify your dream property, it is time to give the seller your proposal. Sometimes, you may need assistance from a qualified real estate agent to help you draft an offer that the seller's agent won't reject.

Plan for Home Appraisal

As mentioned, your preferred home must pass through stringent appraisal to ensure it meets the safety and property requirements. Usually, the lender will schedule an inspection and appraisal of your property on an agreed date.

Submit Additional Documentation for Loan Underwriting

Lenders may require additional documentation to facilitate the underwriting process upon receiving your formal application. Some documents may include your bank statements, tax payment records, and others as necessary. It pays off to provide the required documents promptly to avoid unnecessary delays in the loan processing.

Obtain USDA Approval

All government-backed loans are subject to approval and signing by the US Department of Agriculture. The process may take some time, depending on the number of applications under review by the USDA.

Schedule Your Closing Date

Successful application approval by the USDA paves the way for funding from your lender. Before then, you must schedule an appropriate date with your lender to sign the loan documents and close the application. In addition, the lender will provide a specified funding date when the money will be available in your bank account.

Occupy Your New Home

Once you clear the entire loan application, approval, and home appraisal, the home becomes your property, and you pay the seller. You can now settle in your new home and make it your own.

Top 5 Outdoor Activities To Explore in Wakulla County, Florida

Wakulla County is a small city situated along Florida's Gulf Coast, south of Tallahassee. The town has a superb natural beauty featuring an array of attractive outdoor features and recreation opportunities.

In the fall, temperature levels are usually comfortable, making it an incredible time to spend outdoors. Here are the top five activities you can explore with your family and friends in Wakulla County.

Explore Paddling and Fishing Opportunities

Wakulla has some fantastic and eye-catching fishing opportunities. The county borders the 62-mile paddling and fishing trail of the lower Ochlockonee River. Here, you can venture into kayak fishing excursions all day long. If you love paddling, you can explore the Florida salty paddling trail.

Enjoy Biking or Trail Hiking

Wakulla County has excellent bicycle trails, such as the St. Marks Railroad State Trail and Ochlockonee Bike Trail. You can hire a bike and ride through the scenic trails as you view the lush green lawns.

Ochlockonee River State Park is also home to a beautiful nature trail. So whether you're a first-time or experienced hiker, you can walk around the trails for a lovely view of the county's scenic beauty.

Enjoy a Boat Ride

Wakulla is home to Wakulla Springs State Park. The 6,000-acre park is a natural sanctuary for assorted wildlife, including native birds, turtles, alligators, and other reptiles.

However, the park's highlight is the famous Wakulla Springs, featuring some calm waters flowing from the Wakulla River. You can take a boat ride along the three-mile river as you view wildlife. You could also hire a glass-bottom boat for an enhanced view of the aquatic wildlife.

Watch the Wildlife

A visit to Wakulla County is never complete without watching the town's wildlife. Many parks and wildlife expeditions will enable you to interact with countless animal and bird species.

Notably, St. Marks National Wildlife Refuge hosts 44 species of mammals, 271 bird species, and 38 species of amphibians and reptiles. The expansive park has been a safe home for endangered wildlife since 1931.

Consider Horse Riding

Horse riding is an excellent way to spend your tour in Wakulla County. There is plenty of horse riding stands for beginners and expert horse riders in the town.

For instance, the Cypress Run Farm is a 38-acre property in a quiet environment suitable for horse riders. You can learn horse riding lessons, host parties for your kids, or try horse racing on weekends. With plenty of quiet trails, you could ride on your favorite horse and take photos of the memorable day.

USDA Loans - Final Thoughts

Buying a property such as a dream home or land is worthwhile but calls for a significant financial investment. Thanks to USDA loans, you can now own a home in rural or suburban counties.

A government-backed loan from the Department of Agriculture guarantees 100% financing, flexible monthly payments, affordable interest, and insurance premiums. The biggest perk is the zero-down payment, enabling you to acquire a house at no upfront cost.

So, whether you're buying a condo or upgrading to a manufactured home, you need not worry about finances anymore. For more offers and flexible lending terms in Wakulla County, do not hesitate to visit USDA-approved lenders.

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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