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USDA Mortgage Home Loans Guidelines And Requirements

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USDA Mortgage Home Loans Guidelines And Requirements

This BLOG On USDA Mortgage Home Loans Guidelines And Requirements Was UPDATED On February 8th, 2019

USDA Mortgage Home Loans and VA Loans are the only two mortgage loan programs that a home buyer can purchase a home with no money down and offers 100% financing.

  • The other such mortgage loan program where no money down is required are VA Loans
  • But you need to be a veteran to qualify for a zero down payment VA loan
  • There are qualification requirements for USDA Mortgage Home Loans and not every property nor mortgage loan borrower will qualify for USDA Loans
  • There are certain USDA Loan mortgage lending guidelines to qualify for USDA Loans

Requirements For USDA Mortgage Home Loans

Below are the eligibility requirements for a home buyer to qualify for USDA Mortgage Home Loans.

  • Borrowers household  income and monthly expenses need to meet USDA mortgage lending guidelines
  • Standard debt-to-income ratios are 29 front end debt to income ratios and the back end debt to income ratios are capped at 41%
  • This is much lower than FHA’s 46.9% front end debt to income ratio caps and 56.9% back end debt to income ratio caps
  • Minimum credit scores of 580 is required for zero down payment USDA loans
  • Under 580 scores are permitted on FHA Loans
  • HUD requires under 580 scores require 10% down payment

USDA Loans With High Debt To Income Ratio

The debt to income ratios can be exceeded as long as the USDA mortgage loan applicant has compensating factors.

  • Even though a home buyer can qualify for USDA Home Loans with a 580 credit score, many lenders have credit score overlays
  • Most lenders like to see a 620 scores
  • USDA loan mortgage applicants can have household incomes of up to 115% of the household income for the area

What Types Of Homes Are Eligible For USDA Loans?

All USDA Loan programs require that the home buyer need to be an owner occupant of the subject property to qualify for a USDA loan.

  • The type of properties that qualify for USDA loans are the following:
    • single family homes
    • condominiums
    • planned unit developments
    • prefab/manufactured homes

The subject property needs to be located in an approved rural development area designated and approved by USDA Rural Development.   The property must be located in an approved rural area, as defined by the USDA.

Qualifying For USDA Loans With Direct Lender With No Overlays

The Gustan Cho Team are direct lenders with no mortgage overlays on government and conventional loans. Gustan Cho Associates at Loan Cabin Inc. has no lender overlays on USDA Loans. Home Buyers who need to qualify for USDA Home Loans with a direct lender with no mortgage overlays can contact us at The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

Gustan Cho

www.gustancho.com

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