What is a USDA Loan?
How Do I Apply?
USDA Loans (Section 502 Guaranteed Rural Housing Loan) are the best home loans next to VA Loans. VA Loans are solely for military personnel, and civilians are not able to utilize this loan. You don’t have to be in the military to get 100% financing. The USDA Home Loan Program is available to anyone that meets income and credit requirements. Offering 100% financing with no money down, now you can purchase a home without having to save up for a hefty down payment.
The program is known as the USDA Rural Development Guaranteed Housing Loan and is backed by the United States Department of Agriculture (USDA) and provides low to moderate income families affordable home-ownership opportunities, creating thriving communities in rural and suburban areas across the United States.
USDA, or the United States Department of Agriculture, designed this loan to pull the population out of large metropolitan cites and into surrounding areas. USDA eligible properties are typically located outside of city limits, in suburbs or rural areas. In 2017 USDA helped 127,000 families achieve the reality of home-ownership. The USDA Guaranteed Loan is not meant to finance farms rather they are geared towards the standard single-family home.
This zero-down, 100% financing home loan has income limits, and property eligibility requirements, however you don’t have to be a first time home buyer to take advantage of this great home mortgage option.
Another advantage is that the USDA Home Loan's mortgage insurance fee is just 0.35% monthly – nearly half of what is charged on a conventional loan and a quarter of what is charged on FHA loans. There are no loan amount limits like FHA, instead the applicant’s income determines the maximum loan size. USDA Guaranteed Housing Loans also allow for the buyer to roll their closing costs into the mortgage up to 100% of the appraised value of the home. It is possible for you to calculate your mortgage payment costs using our Mortgage Amortization Calculator or our Loan Payment Calculator.
USDA qualification standards vary by property location, which is why it is best to contact a specialist to help determine if you are eligible. As for the general requirements, a property must be:
USDA Loan Credit and Income Eligibility
USDA Loans are guaranteed by the USDA and funded by USDA-approved lenders. Through the USDA’s guarantee, homebuyers that may not have qualified for a conventional mortgage have the opportunity to secure home financing through the USDA Program. In order to be eligible for the program, prospective borrowers must be willing and able to repay the loan and meet the following requirements:
- Must provide proof of reliable income, including two years of tax returns or W2s
- Must display a positive history of paying debt obligations or be a least 2 years outside of bankruptcy
- Must have a monthly payment that is less than 29% of your monthly income
- Must have a debt-to-income (DTI) ratio not exceeding 41% of your income
- Must have a moderate or low income, not exceeding 115% of the typical income for the area
- Must be a current U.S. citizen or permanent resident with a Green Card
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DTI Requirements for USDA Home Loans
Fixed Rate USDA Guaranteed Loans
USDA Home Loan Income Limits
Part Time, Overtime, and Bonus Income
How to Apply for a USDA Home Loan
- Apply with our loans specialist
- See if you Qualify by meeting income and credit requirements
- Get Pre-Approved by providing tax returns, W2s, pay stubs, employment history and bank statements
- Choose a home in a USDA eligible area
- Make an offer on your USDA home