USDA Loan Requirements

USDA Loan Requirements

USDA Loan Requirements

USDA Loan Requirements

What is your opinion about USDA loan program? Has anyone asked you this question and were you taken aback by the name itself? You’re not alone. Many Americans are still unaware that such an affordable and cost-effective loan program exists. These loans are one of the easiest way to get financing if you’re looking to buy a home. All you have to make sure is that you qualify to the guidelines of USDA loans programs. And, when you do, you can take advantage of 100% financing, zero down payments and low closing costs, among other benefits.

Not having to pay any down payment is an excellent option for many home buyers who either don’t have much savings or don’t have enough income to support it. USDA loans are supported and insured by the U.S. Department of Agriculture and the focal point of this loan program is “no money down” financing. Apart from this, USDA loans are like any other home loans which have a repayment schedule, closing costs but you’ll never have to bear pre-payment penalties. No counselling is required to get the loans approved and it is available for first time buyers as well as repeat buyers.

USDA Loan Requirements

To qualify for a USDA loan the requirements are as follows:

  • USDA Loan RequirementsThe property to be financed should be located in one of the USDA designated rural areas. If you have confusions you can take help from the Federal Home Loan Centres Counsellors to determine whether the property is eligible or not.
  • USDA loans are available for people who wish to use the property as primary residence. No financing is available for second homes or investment properties.
  • Both first time buyers and repeat buyers can avail this loan programs. The applicant cannot own another house at the time of purchase.
  • The total purchase price along with the upfront MI can be financed through USDA loans
  • Though USDA does not define any minimum credit score requirements, the applicant should have a decent credit history. The lender would determine how much you are eligible to get depending on the debt-to-income ratios, so that you can repay conveniently.
  • The income for the applicant should not exceed 115% of the AMI (area median income).
  • W2 income or self-employment is approved by USDA. You should be able to provide documents for income and employment.
  • Gift of closing costs is allowed by USDA
  • The sellers and lenders are allowed to contribute towards the closing costs but not more than 2.75% of the total sales price.
  • Loan term is 30 year fixed rate.

Since USDA loans are dedicated to rural development, it is essential that you qualify to all the guidelines. USDA has devised these guidelines to identify the eligible families and provide support to help them buy a clean and decent dwelling. USDA home loans are available for people having low to moderate income and who are willing to buy a property in the rural areas of the country.

If you are unsure about your eligibility to USDA loans, you can ask for pre-qualification from an approved lender like us. You’ll have to submit the estimates of your finances, assets (if any) and other information. We can then evaluate all these information to determine whether you qualify or not. We’ll also let you know the factors that would stop you from qualifying for USDA loans, so that you can improve them to get approved.

USDA upgrades the eligibility for each state and county on regular intervals, to ensure that the areas that have developed and progressed considerably are removed and areas those are still to be developed are included within the eligible areas. So before your area loses eligibility take advantage of the best loan option available to you.

To know further about the USDA requirements give us a call or fill out our online enquiry form today!