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What is a USDA Rural Development loan?
A USDA loan is a type of mortgage loan that is guaranteed by the U.S. Dept. of Agriculture.
USDA loans can finance a home purchase entirely, meaning borrowers are not required to pay a down payment. The USDA charges a 1% guarantee fee rural development loans. The USDA also allows financing up to 101% of the appraised value allowing borrowers to possibly include the guarantee fee as well as other closing costs depending upon the appraised value.
What are the requirements for a USDA loan?
An applicant must meet the guidelines for monthly income, credit history and debt-to-income ratio. The property must also meet eligibility guidelines.
What does my credit score need to be to qualify?
We currently require a minimum credit score of 640. This does not guarantee eligibility for financing. The USDA has other credit restrictions for applicants that have had foreclosure, bankruptcy, short sales or other serious financial hardships in the past.
Are there household income restrictions?
Yes, each county has a different income threshold depending on the total household size. These income thresholds apply to ALL parties in the household that have income not just the applicants for the loan.
What are the property eligibility requirements?
Most importantly the USDA requires the property to be owner occupied as the principal dwelling. The USDA does NOT allow for the property to be income producing. Therefore NO farms, multi-family properties or properties with acreage in income producing programs (such as the conservation reserve program) are eligible.
USDA requires that the property pass inspection from the HUD Handbook 4000.1 Any safety related issue such as structural, HVAC, electrical, plumbing, roof or WDO termite issue would need to be resolved prior to closing.