USDA

USDA Home Loan Benefits

The United States Department of Agriculture provides loan programs for Rural Development.  Whether it’s a purchase or a refinance the USDA will guarantee a home loan provided by mortgage companies.   USDA loans enable the best mortgage loan terms for qualified borrowers like 30 year loans, 100% financing so there is no down payment, and low guarantee fees that can be rolled into the loan amount; and these loans are not limited to first time homebuyers.  What a great deal! 

If you have or are looking for a home in rural America and earn a low to moderate income then USDA could provide the very best homeownership opportunity for you.  Income limits are in place to insure the available funding; and as long as you don’t exceed 115% of the median income in your area, have a decent credit history and can afford the mortgage payment then the USDA loan is the one to choose.

Not only can the guarantee fee be included, but the eligible closings costs and lender fees can be rolled into the loan.  You can choose your mortgage company as long as they have prior approval; there is no maximum home purchase price, but they will make sure your debt ratios are in line for the home you choose.  The target qualifying housing ratio is 29% and the total debt ratio is 41% but  can sometimes be exceeded with strong compensating factors; so your monthly credit payments plus your new housing expense (mortgage principle/interest, taxes and insurance) must be less than about 50% or your gross monthly income and even better if it is closer to 40%.

The mortgage company will qualify borrowers based on current income, assets, and credit so have your paystubs, w-2’s, and bank account statements handy; and they will need to pull your credit report. We recommend that you get pre-qualified before looking for a new home to see which loan amount and purchase price range best suits you.

Here is a list of eligible property types:

  • Existing homes
  • New construction
  • Modular homes
  • Planned Unit Developments
  • Eligible condominiums
  • New manufactured homes

To wrap this up, rural homeowners have a great opportunity with USDA loan programs.  It is easier to qualify for than a conventional loan in most instances; the entire purchase amount can be financed so there is no down payment.  The guarantee fee is very inexpensive up front and can be rolled into the loan, along with the other closing costs. There are many loan purposes from new homes to modular homes to condo loans, and approved mortgage companies can complete the loan process for you.  Let’s go.