How to Apply for USDA Mortgage Loans
If youâ€™re planning to apply for this guaranteed housing loan program, you must contact a local mortgage lender. An USDA sponsored program might seem like something targeted to ranchers and farmers. But in reality, your occupation has nothing to do with the matter. Eligibility for the loan is based solely on income and location of the property.
What Makes You Eligible for USDA Rural Housing Loan
Property location is the most important factor for qualifying for USDA mortgage loans. It has to be located within a USDA eligible area. While the idea of a rural area brings a specific image to mind, 97% of USA is actually eligible. So, there is a high chance that the property you want might be eligible for financing. Go through USDA maps to browse locations or pinpoint a specific address. You can also ask an USDA loan officer whether your property is located within an eligible area.
The total income of your family needs to be 115% of your regionâ€™s median income or less. As of 2018, the income limit for 1-4-member families is $82,700 and the income limit for 5+ member families is $109,150. Keep in mind that your entire household income will be counted by the loan lender. This would include for example, a working teenager who is not on the loan.
To qualify for USDA rural housing loan, your credit score has to be 640 or above. You could also qualify by proving that your credit score was affected by things outside your control. It could be a temporary situation or due to medical emergencies.
â€¢ The borrower needs to be an US citizen, an US non-citizen national or a qualified alien.
â€¢ You would have to submit a 24-month history of dependable employment and show adequate income.
â€¢ Being a first-time home buyer is not compulsory. But you cannot own any adequate, livable housing close to the property youâ€™re planning to buy.
â€¢ You must occupy this property as your primary residence.
Why Should You Opt for USDA Rural Housing Loan?
USDA mortgage loans have numerous advantages for first time home owners in rural or suburban areas.
â€¢ It is a zero-down loan, so you need to make absolutely no down payment.
â€¢ You can get financing for 100% of the property value.
â€¢ Mortgage rates are extremely low because of the government backing on the loans. This makes it safer and cheaper for mortgage companies and private banks to lend. The mortgage insurance premium is as low as 0.30%
â€¢ USDA offers 15 years and 30 years fixed rate loans. Adjustable rate loans are not available
â€¢ Affordable homeownership promotes settlement in less densely populated parts of the USA. This in turn, promotes better quality of life in rural areas and creates prosperous communities. We hope this serves as a comprehensive guide for first time home buyers looking for a primary residence.
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Article Added on Friday, November 9, 2018
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