Benefits Of USDA Loans
More than 165,000 U.S. Families takes advantage of the zero down payment, 100% financing USDA Home Loan Program to become homeowners every year.
- A large percentage of these home buyers are first time home buyers
- The government implemented and launched USDA Loans to promote home ownership and quality of life in Rural Areas throughout the United States
- USDA does not originate nor fund USDA Home Loans
- USDA guarantees and insures home loans funded by private lenders in the event homeowners default and foreclose on their USDA Loans
- USDA will guarantee and insure lenders against the loss they took when borrowers default and foreclose on their loans
- In order for USDA to insure loans, lenders needs to make sure that all of their borrowers meet USDA Mortgage Requirements and Guidelines
- Due to this government insure, lenders are able to offer very low mortgage rates with 100% financing on USDA Home Loans
Types Of USDA Home Loan Programs
Private lenders originate, process, underwrite, fund, nor services home loans. USDA is a government agency that insures and guarantees home loans that meet USDA Mortgage Requirements in the event lenders takes a loss on borrowers who default on their USDA Loans.
There are three government loan programs:
The above three government agencies all guarantee private lenders in the event homeowners default on their mortgages and lenders takes losses.
- Lenders to meet the agency guidelines in order for government agencies to insure and guarantee loans to lenders
- Due to government guarantees, private lenders are able to offer very low mortgage rates with either no down payment or little down payment on home purchases
Direct USDA Loans are home loans issued by USDA.
- USDA Direct Loans are for low income families
- Low income is define by average incomes depending on the region
- Mortgage Rates can be as low as 1.0% for very low income borrowers with families, this includes subsidies
How Do Home Buyers Qualify For 100% Financing USDA Home Loans
USDA Loans are for owner occupant properties only. Second home financing and investment property loans are not allowed with USDA Financing. Most lenders want to see a lot of income by their borrowers. The more income a home buyer has, the safer and less risk lenders have. Not with USDA Loans. USDA has maximum household income limits. Families with high income cannot qualify. Income limits and caps is different dependent on location and dependent on size of household. Our viewers can click on USDA map and table to find out the maximum income limit on the county home buyers are interested in purchasing a home.
Here are USDA Mortgage Requirements And Credit/Income Guidelines:
- U.S. citizenship or permanent resident of U.S.
- Debt To Income Ratios as follows:
- 29% or less front end debt to income ratios
- 41% back end debt to income ratios
- Minimum credit scores of 580
- Two year employment history
- Full time employment and employment likely to continue for next three years
- Timely payments in payments in past 12 months
Borrowers need to meet minimum of 580 credit scores.
USDA Mortgage Underwriting Process
USDA promotes home ownership to families in need of housing with limited income. Higher end wage earners do not qualify for this loan program Ideal candidate for this loan program are folks with the following:
- First time home buyers who with children in need of housing
- Cannot afford down payment to purchase a home with conventional financing
- Lower income wage earners with families where they need a home and not a one or two bedroom apartments
Rural Development will normally issue a USDA Direct Loan for properties with less than 2,000 square feet with homes with market values under the county’s loan limits. It is dependent on the area and location of the property. Large percentage of California, Hawaii, Alaska are designated high cost areas with average home prices over $600,000. There are many rural areas in the U.S. where homes are under $80,000. USDA Loans is not just for farm and/or rural areas. There are many suburbs of major cities or larger cities that is zone as eligible areas.
Qualifying For USDA Home Loans With Lender With No Overlays
Home Buyers who need to qualify for USDA Home Loans with a direct lender with no overlays on government and conventional loans, please contact Gustan Cho Associates Mortgage Group at Loan Cabin Inc. at 262-716-8151 or text us for faster response. A large percentage of our loans we originate and close are USDA Loans. We are available 7 days a week, evenings, weekends, and holidays.