The USDA home loan program is one of the best-kept secrets in the home buying market today. This zero-down, 100% financing home loan is sponsored by the United States Department of Agriculture to promote homeownership in less-dense communities across the U.S. For this reason, it’s often known as the USDA Rural Development Loan (RD Loan) or Rural Housing Loan. The program is part of the larger Rural Housing Service under USDA's umbrella of programs. But don’t let the name fool you. It’s not just for properties that are far-removed from civilization. In fact, a full 97% of U.S. land mass is eligible for USDA financing, representing 109 million people- about one-third of the U.S. population. It's very likely that a property near you qualifies. Getting a USDA loan program is not much different than getting an FHA loan or a conventional mortgage.
Like FHA, a government agency sponsors the program, but local lenders handle 100% of the transaction. That means your lender does everything from taking your application to issuing the final approval. USDA puts a final stamp of approval on the loan, and even that is handled by the lender.
Here’s how the USDA home loan process looks:Apply → Get Preapproved → Find a House → Full Lender Approval → Final Sign Off by USDA→ Close the Loan → Move in
Apply: You can find a lender that offers USDA financing at this link. Most lenders in the U.S. can approve USDA home loans.Get pre approved: Your lender will look at your income, credit, and employment information. If you meet USDA home loan requirements, you will receive a preapproval letter.Find a house: Use your pre approval letter to make an offer on a USDA-eligible home. Make sure the house is in a designated USDA area before making an offer.
Full lender approval: The lender adds property information to your loan file, and does one last check. Final Sign Off by USDA: The lender submits your full loan file to USDA for its seal of approval.
Close the loan: You sign final paperwork. A few days later, the house is yours.Move in: You successfully completed your mortgage process. Now, enjoy your home. Click to see your USDA loan eligibility (Oct 6th, 2017)
USDA Home Loan Down Payment The down payment requirement -- or lack thereof -- is why so many buyers choose the USDA loan program. No down payment is required, making it one of the few 100% financing home loans available in today’s market.
The only other widely available zero-down loan is the VA mortgage, eligibility for which is gained by adequate military service. For civilians, USDA loans are likely the only no-down mortgage option. Following are minimum down payment requirements for all major loan types.
• Conventional loans: 3% down
• FHA: 3.5% down
• VA: 0% down
• USDA: 0% down
Down payment advantage: It would take years for many families to save 3% down or more. During that time, home prices can go up, making saving a down payment even harder. With USDA, homebuyers can purchase immediately and take advantage of increasing home values.
What is a USDA Loan? Eligibility, Rates & Downsides For 2017
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Is A USDA Loan Right For Me? USDA guaranteed loans aren’t right for every buyer. But, any first-time or repeat buyer looking for homes outside of major cities should check their eligibility for the program. Here are a few advantages:
• Lower down payment than conventional or FHA financing
• Lower mortgage insurance than conventional or FHA loans
• More lenient credit score requirements than for conventional loans
• Unlike VA loans, there is no military service requirement
• The only zero-down loan on the market besides the VA mortgage
When USDA is not the right choice: If you want to buy a home close to the downtown core of a major city, USDA is not right for you. Additionally, if you have a high income for your area, or 20% down available, you will not qualify for USDA. This loan is reserved for those who need it most.
Check see your USDA eligibility (Oct 6th, 2017)
Am I Eligible For A USDA Home Loan? There are two main factors for USDA home loan eligibility: the property and the home buyer.
1. USDA property eligibility
Geographic areas for USDA loans: The home must be located within a USDA-eligible area. The USDA website contains interactive maps with which you can pinpoint an address or take a wider view of a region.
Definition of a rural area: To be eligible, a home must be in a rural area. But you might be surprised at what is considered rural. Generally, cities and towns with a population less than 20,000 qualify, but bigger cities are eligible if they are “rural in character” or don’t have good access to mortgage credit.
Plus, property eligibility maps haven’t been significantly updated in more than 15 years. Many surprisingly populous areas across the U.S. qualify. What was once considered a rural area might now be a significant population center.
Property standards: Your lender will order an appraisal on the property which will ensure it is worth what you’re paying. The appraisal report also verifies the home is livable, safe, and meets USDA’s minimum property requirements. Any safety or livability issues will need to be corrected before loan closing.
Property types: Contrary to popular belief, USDA loans are not meant to finance farms or large acreage properties. Rather, they are geared toward the standard single-family home. You can also finance some condominiums and townhomes with the program.
Occupancy: The home you are buying must be your primary residence, meaning you plan to live there for the foreseeable future. Rental properties, investment properties, and second home purchases are not eligible for the USDA loan program.
https://themortgagereports.com/14969/usda-loans-home-mortgage?utm_campaign=5886
USDA home loan map: USDA home loans are available in many suburban areas around the country, often just outside major metropolitan areas. Below are screenshots showing USDA eligible locations (everything except the tan areas).
