#usda loan program
USDA Guaranteed Rural Housing Loan Program*
The USDA loan program is one of the best fixed rate zero down payment loans which exists for first time home buyers. The guidelines are more flexible but they may change in the coming year so take advangtage of this program now before it’s too late. Also, there are no loan limits but income limitations do apply based on the county you are going to purchase the home in and your family size. Finally, USDA program offers low annual fee which is less than mortgage insurance on an FHA loan so you are able to put 0 down and obtain a lower payment than FHA loan with a down payment. Calculate USDA loan payment. Let’s discuss some of the qualifications for this loan:
The minimum credit score is 640 and you may qualify for the program with a limited credit history. For example, 2 credit accounts with a 12 month history and a 12 month rental history may be enough credit history to qualfiy for this program.
There are income restrictions and USDA will consider the income of a spouse, a girlfriend or boyfriend, and family members who earn income in the household toward the maximum income limit even if any of these individuals are not on the loan. Check income elgibility. Also, overtime and bonus as well as any other variable income will be averaged over the last 2 years and this type of income can’t be declining from year to year which could reduce or disqualify this type of income being used to qualfiy for the loan.
The loan requires zero down payment but there are closing costs which can be paid by the seller or financed into the loan amount if the home appraises higher than the purchase price. Also, cash reserves are not required in most situations.
All installment debts with 10 months or less does not count against you in the debt ratio. The maximum debt allowed is 45% of your gross monthly income which includes mortgage plus auto, personal, and student loan payments as well as minimum credit card payments. Check debt ratio. Furthermore, if your debt ratio is too high then you should pay off the debt you need to qualify PRIOR to buying a home and allow 30 days for the credit bureaus to report these items as being paid off.
The home must be located in eligible area and it should be in move-in condition. Otherwise, repairs on the home will need to be completed prior to closing. Also, homes in rural areas may require well and septic inspections. Finally, acreage should be typical for the area and no working farms or income producing properties may be considered for USDA program.
A first time home buyer who want to utilize the USDA zero down payment program and learn about eligibility should seek a loan officer who has experience with these type of loans because the guidelines and procedures are different than any other program. Apply and get pre-approved for USDA program by filling out pre-approval application here .