USDA Mortgage Loans Eligibility Requirements And Guidelines

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This BLOG On USDA Mortgage Loans Eligibility Requirements And Guidelines Was UPDATED On April 12th, 2019

USDA Loans, which is the USDA Rural Development Guaranteed Housing Loan program, is a special mortgage loan program that offers 100% financing to qualified borrowers. Unlike other loan programs, only homes in selected USDA Designated Areas in the United States qualify for USDA Loans.

  • The United States Department of Agriculture insures all USDA loans
  • The biggest benefit and selling point for USDA loans is no down payment required to purchase a home
  • Competitive mortgage rates
  • Home Buyers can purchase a home with no money down with a USDA mortgage
  • USDA mortgages have the same features as other traditional mortgage loan programs like FHA, VA, and Conventional
  • USDA Loans offers 30 year fixed rate loans at low mortgage rates and no prepayment penalty

USDA loans are for both first time home buyers and seasoned home buyers.

Mortgage Insurance And USDA Loans

Like FHA loans, USDA loans require borrowers to pay upfront and annual mortgage insurance premiums to the U.S. Department of Agriculture.

  • There is a 2% upfront mortgage insurance premium fee charged on any purchase and refinance on a USDA mortgage loan
  • The Upfront USDA mortgage insurance premium can be rolled into the balance of the loan and does not need to be paid out of pocket
  • Then there is a 0.40% annual mortgage insurance premium on the balance of the loan

The annual USDA mortgage insurance premium is paid monthly along with the principal and interest.

USDA Eligibility Requirements

To be eligible for a USDA loan, the property needs to be located in a USDA approved area.

  • There is no down payment required as long as the property in a USDA approved area and the homebuyer meets the USDA mortgage guideline requirements
  • The maximum debt to income ratio allowed for a borrower is capped at 41% DTI
  • There are 15 year fixed rate mortgage loan programs and 30 year fixed rate mortgage loan programs available
  • No adjustable-rate mortgage products on USDA loans
  • USDA loans are for owner occupant properties only
  • Second homes and investment homes do not qualify for USDA Home Loans
  • USDA does not allow for cash-out refinance mortgage loans
  • Homeowners intending on refinancing with a USDA mortgage then the rate and term refinance is the only program

Gustan Cho Associates is a national five-star lender with no overlays on government and conventional loans. We do not have any lender overlays on USDA, FHA, VA, and Conventional Loans. We are also correspondent lenders on non-QM loans and bank statement loans for self-employed borrowers. There are no waiting period requirements after bankruptcy and foreclosure with non-qm loans.

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