Learn about your Eligibility for a 100% USDA Home Loan

USDA rural home loan programs were created to assist in the development of the lesser populated, rural areas of the country through their direct and guaranteed residential loan insurance programs. The United States Department of Agriculture (USDA) Rural Housing Programs have gained in popularity recently as they are currently the only source of 100% financing for owner-occupied residential properties.

USDA Home Loans do have a lot of benefits beside the 100% (102% including the 2% funding fee) financing aspect.

In many ways, USDA mortgages are similar to FHA Home Loans in that they offer flexible credit qualifications, the debt to income ratio allowances are reasonable, great 30 year fixed interest rates and considerably less roadblocks to qualify for a loan.

You can also finance up to 100% of any repairs that are needed based on the “as-improved” value. The “as-improved” value is what the house will appraise for after the improvements are done. This opens up the possibility of buying a HUD home or other bank reo foreclosures that would need repairs.

There are some qualification requirements to be eligible for USDA loans. You must meet some income and credit qualifications set by the USDA rural housing guidelines. One of the good things about these flexible mortgage loans is that your credit history does not have to be perfect but you do have to show the ability to make the monthly payments. Also, the residential property you want to buy has to be located in a USDA eligible rural area.

USDA Guidelines for Residential Mortgage Eligibility

  • You must be a United States citizen, a qualified alien, or must be admitted legally to the United States for permanent residence.
  • Your annual income must be less than the income limit established by the USDA. Income limits are set by the USDA for each county in the United States and your adjusted income cannot exceed the limit where the property is located. All adults that reside in your household that have an income must be included in calculating the total income of the household. In order to meet the USDA income qualification requirements, there are a few adjustments that may need to be made when arriving at the gross household income figure. An example of one of these adjustments is expenses for child care.
  • You do not have to have perfect credit but you do need average credit. The USDA lender handling the underwriting and funding of your home loan may require additional conditions beyond the minimal USDA loan requirements.
  • The total mortgage payment including property taxes and insurance should not exceed 29% of your gross monthly income.
  • All of your monthly repayments on outstanding debts must be less than 41% of your gross monthly income.
  • Your total adjusted household income cannot be more than the maximum income limit in the county the property in located as determined by USDA.
  • You must not currently own an adequate home.
  • You must have the legal capacity to incur the loan obligation.
  • You have to be the owner occupant. You cannot buy the property to rent out, or hold as an investment.

Get Approved For a USDA Mortgage

The easiest way to get approved for a USDA loan is to shop multiple lenders and see who has the best rates and fees as well the most expertise. Getting a quote from an approved USDA lender is easy, free and there isn’t an obligation if you decide to change your mind. Get a free USDA mortgage quote today!

USDA Mortgage Rates: Different By Lender

Many times people shopping for a USDA loan will think that there is an “official” USDA mortgage rate that is set by USDA or the government or someone that is “official”. Not true. Each lender who offers USDA loans will set their own rates – and the rates will different by each lender, possibly each day and possibly even multiple times each day.

USDA Rates Change Frequently

USDA mortgage rates change frequently – because they are just like any other mortgage program: the rates are driven by the mortgage bond market which is actively trading every day. If you shop multiple lenders, you will find that each lender may have a slightly different rate for a 30 year fixed rate USDA loan – and on any given day any lender may be lower or higher than another lender.

To further complicate it, each lender may let their loan officers quote rates – which means that if you speak with multiple loan officers at one lender, you may get different rates for the day. Thats right – 2 loan officers who work for 1 lender may quote you 2 different rates. That is why the best thing you can do if you are interested in getting a USDA loan is to shop around.

Shop USDA Lenders For The Best Deal

Shopping for a great USDA lender who can help you is important because by shopping lenders and getting a written quote – you can easily compare who the best lender is for you. With USDA mortgage rates changing so often – and with so many possibilities of being different – it can easily pay thousands of dollars over the life of your loan to shop multiple lenders when getting a USDA loan. Start here by shopping some great USDA lenders and getting started with getting a great USDA loan today.