Finding the best mortgage loan for you can seem daunting. There are so many choices! The good news is that with a little research and a smart loan officer, you are sure to pick the right one. Who knows? It may even be a USDA home loan. 

Not sure what a USDA loan is, or if you qualify? We have the 411.

What are the requirements? 

A USDA loan is a bit less strict than some other programs out there. Borrowers need a provable steady job and income, a decent but not stellar credit score, and must not be too far in debt. They must meet the lender’s ability to repay rule to be able to qualify.

Who is eligible?

There are income caps for eligibility that are set by the local median income. Go online or check with your loan officer to see if you qualify!

Can I buy a home anywhere? 

Unfortunately, you can’t. The property you’re purchasing must be in a rural area of the country to be USDA eligible. You can find out if the property is eligible on the Department of Agriculture website.

What would make me ineligible for a USDA loan? 

Having an income of over the income limit would nix your eligibility.

Is there an income limit for a USDA loan?

A high debt-to-income ratio (owing a lot compared to your income) and a low credit score may make qualifying unlikely.

What if I have bad credit? If your scores are lower, you may need to do some work on your payment history and your debt load before you can secure a USDA loan. If, however, you don’t have little or no credit, the lender might look at alternative credit information like your utilities and cell phone bill to get you qualified.

How much do I need for a down payment? USDA loans provide funds for 100% of the home price.

Can I buy an investment home with a USDA loan? No. Neither rentals nor vacation homes can be financed with USDA loans. The USDA requires its loans to be used for primary residences only.

Can I buy a farm with a USDA loan? No, working farms can’t be purchased with a USDA loan. They are meant for residential properties only.

Is a USDA loan only for first-time homebuyers? Happily, a USDA loan can be used for first-time homebuyers or buyers who have bought a home or homes in the past.

Does the home I buy need to be a certain price or is there a limit? The USDA doesn’t have a maximum loan limit.

USDA home loans are great options for borrowers who are looking to purchase in eligible areas.

Are you interested in talking to an experienced loan officer to get assistance on your homebuying journey? Contact us today to get started!