There’s a lot to consider when it comes to financing a home — from managing your credit score and debt-to-income ratio, to looming expenses and exploring different mortgage options.
In Florida, the possibilities are even more extensive. Prospective homebuyers have their choice of lively urban centers, remote rural communities and everything in between. Because it’s our job to make sure you have the information you need to to find the best fit for your financial situation and homeownership goals, let’s take a closer look at USDA loans in Florida.
What Is a USDA Loan?
USDA loans, also known as Rural Development Loans, have been offered by the U.S. Department of Agriculture since 1949. They were established to stimulate economic growth in less densely populated communities, primarily rural and suburban areas.
Homebuyers are often attracted to USDA loans because they offer significant cost savings compared to other options. These loans provide 100% financing, require no down payment and feature low private mortgage insurance rates. Both types of USDA loans — single-family direct loans and the single-family guaranteed loans — have paved the way for homeownership for millions of people.
The single-family direct loan is intended for very low and low-income borrowers, while single-family guarantees are for those with low and moderate income. Eligibility criteria vary by state, but USDA loans typically offer less stringent requirements compared to many other loan programs.
FHA vs. USDA Loan
Federal Housing Administration (FHA) loans and USDA loans are both government-backed mortgage options designed to relieve the financial burden of the homebuying process. However, they each serve different purposes and have distinct eligibility criteria that are important to understand.
Both types of loans are processed through individual lenders but are backed by the federal government.
| FHA loan | USDA loan | |
| Intended borrower | Moderate and low-income prospective homebuyers | Prospective homebuyers in rural and suburban areas |
| Down Payment | At least 3.5% down | No requirement |
| Location | No requirement | Must be in an eligible area |
| Credit Score | 500-580 (Put less money down with a higher credit score) | 640+ recommended |
| Interest Rates | Often higher than USDA and conventional mortgages | Often lower than FHA and conventional mortgages |
| Closing Costs | Buyer is responsible for closing costs. Specifics vary by lender but some fees can be covered by the seller or lender. | Buyer is responsible for closing costs. Specifics vary by lender but some fees can be covered by the seller or lender. |
What Are the Income Limits for USDA Loans in FL?
Since the USDA home loan program was designed for low- to moderate-income buyers, there are strict eligibility rules. The income limits for USDA loans in Florida vary from county to county and are based on the total income of all members of the household over the age of 18.
In general, Florida households with up to four members can have a max gross annual income of $110,650. The threshold is higher for households with five or more members, totaling $146,050 in some counties. County-specific information is available on the USDA website.
Applying for USDA Loans in Florida
These are the general steps you will need to follow to apply for a USDA loan in Florida. It’s important to note, however, that specific requirements may vary based on lender requirements and individual circumstances.
- Determine eligibility by using the self-assessment tool provided on the USDA website to check income and location guidelines.
- Get pre-qualified by a licensed mortgage broker by providing information about your income, credit, assets and debts.
- Complete required applications, including Form RD 410-4 (Uniform Residential Loan Application), Form RD 3550-1 (Authorization to Release Information) and Form RD 3550-4 (Employment and Asset Certification).
- Get a property appraisal required by the USDA to ensure that the property in question abides by regulations.
- Wait for loan approval and closing information from your lender, which will require an in-person meeting to sign paperwork.