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How Can a USDA Loan Help You Purchase a Home?

May 30th, 2014 by Sean Stephens

Can a USDA Loan Help Me Buy a Home? 

The USDA Rural Housing Program is sought after by consumers, but due to the complex guidelines,  education is critical to unlocking the potential behind this unique program.

Today’s video tip will breakdown the benefits which will also help answer all too common questions.

So What are the Benefits of a USDA Rural Home Loan?

  • USDA Loans allow for 100% Financing. When compared to FHA or Conventional programs, this offers an immediate reduction in out of pocket expenses.
  • Lower Monthly Premiums. Similar to FHA monthly mortgage insurance premiums, USDA loans also carry a monthly fee, but it is over 3X lower, thus allowing for a reduced monthly payment & increased affordability.
  • The ability to finance closing costs. In cases when the appraised value is higher than the sales price, USDA loans will allow homebuyers the option of financing eligible out of pocket settlement charges.
  • No Maximum Loan Limit. Mortgage amounts are determined by qualifying ability, thus not restricting homebuyers by setting pre-determined loan limits.
  • Flexible Credit Qualifying. While minimum credit conditions are required, exceptions can be made for previous short sales, bankruptcies, and foreclosures depending on the circumstances. Utilizing Manual underwriting guidelines is another option that we can provide down to a 620 score, but be cautious because not all lenders work with manual underwriting.
  • Generous Household Income Limits. The majority of counties*  have income limits up to $74,750 for a 1 to 4 person household, $98,650 for a 5 to 8 person household size.  Increased limits are allowed for higher cost counties and for family households with 9 or more people. (*AL, FL, TN, TX)
  • Not Restricted to Only First Time Homebuyers. While many assume that only first time homebuyers can be eligible, previous homeowners are also possible candidates provided they are purchasing a primary residence and meet the qualifying criteria.

So what are the basics to qualifying?

  1. Property Eligibility. The subject property being purchased must be located in an approved USDA Rural Development area. There are no exceptions to this policy. Eligible areas can vary per county.
  2. Income Limitations. As mentioned previously, there are income limitations based on family household size. USDA loans consider income from all family household members, and not just who is on the loan. However, deductions can be available to assist in qualifying, so make sure to double check with a mortgage professional who is deeply experienced with USDA Rural Home Loans.

Please note that all loans are case by case scenarios, credit scores do not guarantee approval, and minimum credit conditions will apply.

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