USDA Home Mortgage Guidelines And Eligibility Requirements

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This BLOG On USDA Home Mortgage Guidelines And Eligibility Requirements Was Written By Gustan Cho of GCA Mortgage Group

USDA Home Mortgage Guidelines
Gustan Cho Associates Mortgage Group

Home Buyers who meet USDA Home Mortgage Guidelines can qualify for USDA Home Loans with 100% financing.

  • Many people do not realize that USDA Loans is not just for a home purchase in rural areas
  • Many suburbs of larger cities and towns are designed USDA designated areas
  • Homebuyers who like to live in rural or suburban areas with larger lots and not on little lots can benefit with this unique loan program
  • USDA Rural Development offers 100% financing for homebuyers in areas designed are rural in all 50 states

In this article, we will discuss and cover USDA Home Mortgage Guidelines And Eligibility Requirements.

What Are Key USDA Home Mortgage Guidelines

Here are the key USDA Home Mortgage Guidelines And Eligibility Requirements:

  • 100% down payment where there is no down payment required by buyers
  • Homes need to be located in areas designated as rural areas by Rural Development
  • Thousands of counties throughout the United States are designated rural areas
  • Homebuyers can purchase acreage with USDA Loans but cannot purchase working farms
  • Both the borrowers and the property needs to qualify
  • Borrowers household family income cannot exceed maximum income limits set for the county

However, gross qualified income needs to meet the debt to income ratio requirements.

Borrowers Eligibility Credit Requirements

What are Borrowers Eligibility Credit Requirements

Gustan Cho Associates Mortgage Group is a national mortgage company with no overlays on government and conventional loans. Besides the area of the home being located in a designated county, the borrowers need to meet credit and income guidelines.

Here are the basic credit eligibility requirements:

  • Minimum 580 credit scores
  • Need to get an approve/eligible per Automated Underwriting System approval
  • To get an AUS Approval per automated underwriting system findings, timely in the past 12 months is required
  • 3 year waiting period after Chapter 7 bankruptcy, foreclosure, deed in lieu, short sale
  • Re-established credit after housing event and/or bankruptcy
  • No late payments after housing event and/or bankruptcy
  • Three to five aged credit tradelines is highly recommended

USDA Home Mortgage Guidelines On Income And DTI

Most loan programs prefer more income by borrowers.

  • However, USDA Loans have a cap on maximum income allowed in order to be eligible to qualify
  • Maximum debt to income ratio is capped at 29% front end and 41% back end
  • Deferred Student Loans that are deferred for longer than 12 months are not exempt from student loan calculations
  • USDA is similar like FHA Loans when it comes to deferred student loans
  • Agency guidelines are for mortgage underwriters to take 1.0% of the outstanding student loan balance and use that as a hypothetical monthly debt
  • USDA Mortgage Guidelines on income are differentiated on the number of people in the household of borrowers
  • There are breakdowns in maximum household income limits which depends on the number of people in the household and the area of the property

For example, for a household of 5 in a certain county, the maximum income for borrowers may be capped at $121,700.

How Much Money Does Home Buyers Need To Purchase Home With USDA Home Loans

How Much Money Does Home Buyers Need To Purchase Home With USDA Home Loans

There are two types of payment home buyers needs when purchasing a home.

  1. Down Payment
  2. Closing Costs

Qualified homebuyers can purchase homes in a rural designated area anywhere in the United States with no money down and 100% financing.

  • Most homebuyers do not have to worry about coming up with any closing costs
  • USDA allows sellers to contribute up to 6% in sellers concessions for home buyers closing costs
  • All sellers concessions need to be used by home buyers
  • If there are sellers concession overages, it needs to go back to a home seller
  • However, if there are any sellers concession overages, it can be used to buy discount points to buy down mortgage rates
  • USDA, besides VA Loans, is the only loan program that offers 100% financing

If home buyers are short of paying for closing costs, the mortgage lender can help with covering closing costs with a lender credit.

Qualifying For USDA Home Loans With Direct Lender With No Overlays

Home Buyers who want to start the qualification and pre-approval mortgage process with a national direct lender with no overlays on government and conventional loans can contact us at GCA Mortgage Group at 262-716-8151. Text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays. We close 100% of all of our pre-approvals since all of our pre-approvals are loan commitments to lend that have been underwritten and signed off by our mortgage underwriters.

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