The USDA Rural Development is committed to helping improve the economy and quality of life in rural America. One of the many ways are the Homeownership Programs. Housing Programs allow families and individuals to own safe and affordable homes located in rural America.
USDA Home Loan
Well-built, affordable housing is essential to the vitality of communities in rural America.
Become a Homeowner
USDA home loans are a popular option because they don’t require any down payment so that you can finance 100% of your home’s value. Plus, the U.S. Department of Agriculture guarantees these loans, making them attractive to lenders and homebuyers.
USDA Home Loans are:
- Only for first-time homebuyers
- Restricted to primarily rural areas
- For eligible homebuyers only
USDA home loans, sometimes referred to as “rural housing loans” because the U.S. Department of Agriculture guarantees the loans, are a great option for first-time homebuyers. USDA loans must be used for your primary residence, not a second home. You also have to meet the eligibility requirements.
Here are the main benefits:
- USDA home loans do not require a down payment
- You can finance up to 100% of a home’s value
- USDA home loans are restrictive in certain areas (get details)
- You may qualify for lower mortgage insurance premiums (PMIs)
How Do You Qualify for a USDA Home Loan?
Income limits to qualify for a USDA home loan vary by location and depend on household size. To find the loan guarantee income limit for the county where you live, review this USDA Map. USDA guaranteed home loans can fund only owner-occupied primary residences.
Other eligibility requirements include:
- U.S. citizenship (or permanent residency).
- A monthly payment — including principal, interest, insurance, and taxes — that’s 29% or less of your monthly income. Other monthly debt payments you make cannot exceed 41% of your income. However, the USDA will consider higher debt ratios if you have a credit score above 680.
- Dependable income, typically for a minimum of 24 months.
- Good credit history, with no accounts converted to collections within the last 12 months, among other criteria. If you can prove that your credit was affected by circumstances that were temporary or outside of your control, including a medical emergency, you may still qualify.
- Applicants with credit scores of 640 or higher receive streamlined processing. Below that, you must meet more stringent underwriting standards. You can also be eligible with a nontraditional credit history.
Who can apply for a USDA home loan?
- Meet income-eligibility
- Agree to occupy the dwelling as their primary residence personally
- Be a U.S. Citizen, U.S. non-citizen national, or Qualified Alien
- Have the legal capacity to incur the loan obligation
- Have not been suspended or debarred from participation in federal programs
- Demonstrate the willingness to meet credit obligations on time
- Purchase a property that meets all program criteria
How Do You Apply for a USDA Home Loan?
At GoPrime Mortgage, Inc., we suggest you start by talking with one of our experts to learn about your options and begin the process. While you can apply online, there is comfort in knowing that you’ll have a direct point of contact for questions or concerns along the way.
Getting preapproved for a mortgage is a smart first step.
At GoPrime Mortgage, Inc. getting preapproved means running and evaluating your credit report. It also means you will be asked to supply your loan officer with proof of your finances. Being thorough now saves you time later in the process. It also gives you peace of mind because you can rely on the amount for which you pre-qualify.
When you are preapproved for a mortgage at GoPrime Mortgage, Inc., it’s worth more than a pre-qualification anywhere else. You still get a “pre-qualification letter” that tells you how much GoPrime Mortgage, Inc. is willing to loan you. The due diligence that went into that letter means you can make an offer on a home with confidence.
Pre-Approval vs. Pre-Qualification
Pre-qualification at any other lender, independent or not, often is just a rough guess at how much that institution would be willing to lend you. It guarantees nothing because pre-qualification usually is based on guesses about your income, debts, and assets. GoPrime Mortgage, Inc. asks you to substantiate that information upfront so that your pre-qualification means a lot more – we prefer to leave the guessing out of the equation.
Of course, you always have the option of completing the entire pre-approval process. It does position you be a serious, well-prepared homebuyer, which will impress many sellers and realtors – but a pre-approval takes more time than a typical pre-qualification. Pre-approval goes through the same process and requires the same documents as actually applying for the loan, but without a specific property address identified.
Advantages of Pre-Qualification
Another advantage of getting preapproved for a mortgage is that it helps me and my team determine the right type of mortgage loan for your situation. GoPrime Mortgage, Inc. offers many different types of mortgage loans. With us, you have an ally looking out for your best interests for your mortgage.
USDA Home Loan Background
On April 30, 1935, President Franklin D. Roosevelt signed an Executive Order which established the Resettlement Administration, what we know today as USDA Rural Development. During the Great Depression, this provided aid to destitute families by helping them relocate. Since the beginning, USDA has assisted people in owning homes and offering the USDA home loan.
Owning a home is now within reach for rural residents, thanks to a USDA home loan. The mission statement of the USDA home loan program is “to improve the economy and quality of life in rural America.” It was created by the U.S. Department of Agriculture to assist applicants in obtaining decent, safe, and sanitary housing in eligible rural areas.