USDA Mortgage Loans Eligibility Requirements And Guidelines

This Article Is About USDA Mortgage Loans Eligibility Requirements And Guidelines

The USDA Rural Development Guaranteed Housing Loan program offers 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 on USDA loans is there is no down payment required to purchase a home. Mortgage companies offer these loan programs to borrowers who meet the USDA agency guidelines. In the event, if borrowers default on their mortgages, USDA Rural Development Guaranteed Housing Loan Program will step in and partially insure and guarantee the lender against the loss. Due to the government guarantee, lenders are more than eager and willing to offer USDA loans.

USDA loans have 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 loan programs are for both first-time home buyers and seasoned home buyers.

Mortgage Insurance And USDA Loans

Mortgage Insurance And USDA Loans

Like FHA mortgages, USDA requires 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 USDA mortgages. 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 mortgage insurance premium is paid monthly along with the principal and interest.

USDA Eligibility Requirements

USDA Eligibility

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 is 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. There are 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. For 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 mortgage company licensed in multiple states with no lender 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.

Gustan Cho Associates has dozens of lending partnerships with wholesale mortgage lenders. Not only do we offer government and conventional loans with no lender overlays, but we have every loan product in today’s market available for our borrowers. We have a national reputation for being a one-stop mortgage shop. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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