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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About USDA Property Eligibility
One of the biggest roadblocks to homeownership is the requirement of the down payment with USDA loans this barrier does not exist.
Let us learn all about USDA loans in this article, USDA property eligibility, and the way to check the USDA property eligibility map, and to seek USDA eligible homes.
What is a USDA loan?
The United States Department of Agriculture is backing USDA loans mortgages, as part of its ‘Rural Development Guaranteed Housing Loan’ program.
Homebuyers with low-to-average income for their area can avail themselves of these loan programs.
They offer 100% financing with reduced mortgage insurance premiums, and they feature below-market mortgage rates
All About USDA Loan Requirement
- S. citizenship or legal permanent resident (i.e. U.S. non-citizen national or qualified alien)
- Ability to prove that you are worthy of being given credit, so have a credit score of at least 640
- Stable and dependable income
- 12 months of no late payments or collections showing the willingness to repay the mortgage
- The adjusted household income must be equal to or less than 115% of the area median income
- The property must serve as the primary residence and should be located in a qualified rural area
How do you check your USDA property eligibility?
USDA loans can be approved by endorsed lenders around the country
Technically, to be USDA-eligible city or town must:
- Have a population of less than 20,000
- Be rural in character
- Have a lack of available credit
Few steps for USDA Loan Eligibility
- Income eligibility — Showing a steady job and monthly income, which is proven by tax returns.
- Credit requirements — Having a FICO credit score of at least 640 which could vary by lender
- Existing debt ratio — DTI ratio of 41% or less in most cases.
How long does a USDA loan process take?
- Apply with a USDA-approved lender
- The lender is supplied with income, asset, and credit information in a days time
- The lender issues a pre-approval which could take 3 days to 1 week
- To find a home in a USDA eligible geographic area you can use the available USDA property eligibility map.
- The appraisal and any other items needed is checked by the lender in a weeks time
- The lender sends the file to your state’s USDA office for approval within a day
- The USDA office completes a final “sign-off” talking about a few weeks for it
- Closing documents are sent by the lender to the escrow company, which you sign in a weeks time and
- The loan is finalized and the house is yours in 3 days of the closing
The Extra Step in Your USDA Loan Eligibility?
The lender can approve and close the loan on its own with an FHA, VA, or conventional loan.
However, USDA needs to be checked by USDA staff. With this loan, you only need to find USDA eligible homes by going through the USDA property eligibility map which is currently about 97% of U.S. landmass.
USDA Loan Property Eligibility Is Location-Based
To stimulate economic development in less-dense areas of the U.S these loans were created. As published on USDA’s eligibility maps the buyers can use the loan within certain geographical boundaries.
A very interactive USDA eligibility map online for easy search is maintained by the government.
A zero-down USDA loan can be availed to purchase Homes outside densely populated centers.
A full 97% of U.S. land mass is USDA-eligible, representing 109 million people.
The map boundaries are based on population numbers resulting in some solidly suburban areas also to qualify under the USDA eligibility property map.
How Much is the USDA Closing Costs?
Even with 0% down, you will still need to come up with closing costs, which could total thousands of dollars. The closing costs come in two categories:
- To acquire the loan and transfer title cost
- Expenses associated with the property
These costs to obtain the loan and home vary by lender and company, no matter where you get a loan, the expenses tied to the property don’t change.
Expenses Associated with the Property:
Any time you own a home there are certain expenses, which are required.
The lender will require you to prepay a certain number of months of these expenses when you get a mortgage so that your home is not in jeopardy of being confiscated by the government, due to unpaid taxes, or be at risk of being destroyed with no insurance.
- Property taxes: it runs around 1% of the property value per year
- Homeowner’s insurance: $500-$1,000+ per year, depending on home value.
When you finalize your loan the lender will require the following amounts to be collected with other closing costs.
- 4-8 months of property taxes
- 12-14 months of homeowner’s insurance
Conclusion
In today’s home buying market, USDA loans offer a very good value. Though USDA loan comes with income and geographic eligibility standards it is still better than FHA or conventional.
A USDA lender gives a full eligibility check so the best way to get started is to get a USDA rate quote.
