The USDA Loan is a mortgage option available to some rural and suburban homebuyers. USDA Home Loans are issued by qualified lenders and guaranteed by the United States Department of Agriculture (USDA).
The USDA Loan is a mortgage option available to some rural and suburban homebuyers. USDA Home Loans are issued by qualified lenders and guaranteed by the United States Department of Agriculture (USDA).
Eligibility is based on the property size, location and condition along with income and other qualifying factors. Some of these requirements include:
No. While USDA loans can benefit low-income borrowers tremendously, buyers with higher income can apply for USDA loans as well.
Regarding income limits, the USDA will approve any borrowers with an income that does not exceed 115% of the median income in the area, based on your family size. For example, if the median income of USDA-approved area averages at $100,000, eligible borrowers must have an income of $115,000 or less.
USDA loans can finance a home purchase entirely, meaning borrowers are not obligated to pay a down payment. While the government charges a 2.0% guarantee fee for Rural Development loans, the USDA also finances up to 102% of the mortgage, allowing borrowers to include closing fees or a portion of the guarantee fee within the loan balance.
Yes. USDA loans can only apply toward home purchases in areas deemed “rural” by the USDA. Fortunately, this definition is fairly open and includes many small towns, suburbs, and exurbs of most major cities.
Most homes just outside of major cities qualify.
To find out if your prospective home purchase satisfies this requirement, visit the official USDA Property Eligibility page.
As with other loan programs, USDA loans include a mandatory waiting period for borrowers who have recently filed for bankruptcy. Borrowers who have undergone a Chapter 7 bankruptcy must wait a minimum of 3 years from the discharge date before regaining USDA eligibility.
For Chapter 13 bankruptcy, borrowers must wait a minimum of one year, provided that all court payments have been made on time.
None. The loan requires zero down payment. If the home appraises for higher than your purchase price, you can potentially even finance up to 102% of the purchase price to help cover closing costs.
