Florida Rural Development Home Loans

Homebuyers in Florida are greatly benefiting from the Florida Rural Development Home Loan. There are many advantages to this loan type which is also known as a USDA Loan. The Rural Development home loan has become a very popular loan type over the last several years due to certain features as no money down, low monthly mortgage insurance, and aggressive seller paid closing costs.

The most popular feature of the Florida Rural Development Home loan is the no money down feature. People are often amazed that they can still get 100% financing in today’s market. Outside of the VA home loan, which is only for Veterans, there is not another $0 down home financing option available besides the USDA Loan. The Rural Development Home Loan was designed for home buyers in rural areas with low to moderate incomes. It has evolved some and many people who live just outside of largely populated areas are benefiting from it. Not only does it offer no money down but in some instances homebuyers can borrow above the sales price for appliance upgrades for the home. This is in instances where the home appraises for more than the sales price.

The USDA Loan does not actually have mortgage insurance instead its version is called a guarantee fee. It’s the same concept in theory as mortgage insurance and often time’s homebuyers are confused by the terminology.  The term comes from idea of the program which is the USDA Guaranteed Home Loan. The USDA is guaranteeing or backing the loan. There is an upfront such as FHA and a monthly amount the borrower pays. The current up front amount is 1%. For example a home that is being sold for a $100,000 has a upfront amount of $1,000. This is put into the loan so the borrower is now taking a loan for $101,000. The monthly amount paid is technically a year fee that is paid out each month. The current factor used for the fee is .55%. In the same example from about if a loan amount is $100,000 then the yearly fee is going to be $550 which is divided by 12 thus making the monthly payment $45.83. While these fees may seem like a lot of money they are significantly less than the FHA loan. By charging these fees the USDA is able to sustain the home loan program in the case of defaults and other costs.

Another attractive feature of the Florida Rural Development Home Loan is the seller concessions that are allowed. The term seller concessions refers to the amount of money the seller of a home is paying towards the buyers closing costs. In the case of the Rural Development Home Loan the percentage is 6%. From our example above the seller of a $100,000 loan can pay up to $6,000 of the buyers closing costs. This is very attractive to home buyers because they can usually purchase a home with little to no out of pocket money with the USDA Loan because of the 100% financing and aggressive seller paid closing costs.