USDA Home Loans
USDA Home Loans
This program is administered by USDA Rural Development, which serves the public through more than 800 field offices nationwide. More rural families and individuals may be eligible to become homeowners with the help of a USDA guaranteed home loan. When the federal government agrees to guarantee a loan, lending institutions can help buyers while incurring less risk. Through USDA’s Guaranteed Rural Housing Loan Program, low- and moderate-income people can qualify for mortgages even without a down payment.
- Have an adequate and dependable income;
- Be a U.S. citizen, qualified alien, or be legally admitted to the United States for permanent residence;
- Have an adjusted annual household income that does not exceed the moderate income limit established for the area. A family’s income includes the total gross income of the applicant, co-applicant and any other adults in the household. Applicants may be eligible to make certain adjustments to gross income, such as annual child care expenses and $480 for each minor child in order to qualify. There is an automated income eligibility calculator at: http://eligibility.sc.egov.usda.gov;
- Have a credit history that indicates a reasonable willingness to meet obligations as they become due.
The repayment ability will be based on the following ratios: Principal, Interest, Taxes, and Insurance (PITI) divided by gross monthly income must be equal to or less than 29 percent.
Total debt divided by gross monthly income must be equal to, or less than, 41 percent.
- Guaranteed loans can be made on either new or existing homes;
- Existing homes must be structurally sound, functionally adequate, and in good repair;
- There are no restrictions on the size or design of the home financed;
- The home must not be used for income-producing purposes;
- Homes must be located in rural areas. Rural areas include open country and places with a population of 10,000 or less and under certain conditions?towns and cities with between 10,000 and 25,000 residents.
- Loans may be for up to 100 percent (102 percent if the guarantee fee is included in the loan) of appraised value or for the acquisition cost, whichever is less.
- No down payment is required.
- Mortgages are 30-year fixed rate at market interest rates.
- Loans may include funds for closing costs, the guarantee fee, legal fees, title services, cost of establishing an escrow account and other prepaid items, if the appraised value is higher than sales price.
- Sellers may contribute to the buyer’s closing costs.
- Buyers must personally occupy the dwelling following the purchase.
- Loans may be made to refinance either existing USDA Rural Development Guaranteed housing loans or our Section 502 Direct housing loans.
- For purchase loans, a one-time guarantee fee equal to 2.0 percent of the loan amount is charged to the lender.
- The charge for refinance loans is 0.5 percent. Typically, the lender passes on this expense to the borrower as a closing cost.
- After the one-time fee is paid, there is no recurring monthly expense charged for guaranteeing the loan.
Please view our Disclosures page for details.
Call Theresa Springer (MLO #70667/NMLS #70667) today at 360-798-4161 to see the difference that working with an experienced home loan professional can make for you.
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