USDA or Rural Development

What Is a USDA or Rural Development Loan? Am I Eligible for One?

USDA loans are zero-down-payment mortgages for rural and suburban homebuyers. They’re mainly for borrowers who aren’t wealthy and can’t get a traditional mortgage.

What Is a USDA rural development Loan?

Perhaps you feel more at home surrounded by pastures than pavement. If so, buying a home might be well within reach, thanks to the U.S. Department of Agriculture mortgage program. In fact, the USDA might have one of the government’s least-known mortgage assistance programs. A USDA home loan is a zero down payment mortgage for eligible rural and suburban homebuyers. USDA loans are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture. Call The Scott Miller Team today to see if you qualify Scott Miller 612-751-7268 Scott Gruel 612-599-1993

The Rural Development program is designed to “improve the economy and quality of life in rural America.” It offers low interest rates and no down payments, and you may be surprised to find just how accessible it is.

With all types of mortgage loans to choose from, how do you know whether a USDA loan is right for you? Call The Scott Miller Team today Scott Miller 612-751-7268 Scott Gruel 612-599-1993

How USDA or Rural Development Moan Programs Work?

There are three USDA home loan programs:

Loan guarantees

The USDA guarantees a mortgage issued by a participating local lender — similar to an FHA loan and VA-backed loans — allowing you to get low mortgage interest rates, even without a down payment. If you put little or no money down, you will have to pay a mortgage insurance premium, though.

Direct loans

Issued by the USDA, these mortgages are for low- and very low-income applicants. Income thresholds vary by region. With subsidies, interest rates can be as low as 1%.

Qualifying for a USDA-backed mortgage guarantee

Income limits to qualify for a home loan guarantee vary by location and depend on household size. To find the loan guarantee income limit for the county where you live, consult this USDA map and table.******* Call The Scott Miller Team to help calculate your qualifying income, Scott Miller 612-751-7268 Scott Gruel 612-599-1993

USDA Eligibility

•U.S. citizenship (or permanent residency).
•A monthly payment — including principal, interest, insurance and taxes — that’s 29% or less of your monthly income. Other monthly debt payments you make cannot exceed 41% of your income. However, the USDA will consider higher debt ratios if you have a credit score above 660.
•Dependable income, typically for a minimum of 24 months
•An acceptable credit history, with no accounts converted to collections within the last 12 months, among other criteria. If you can prove that your credit was affected by circumstances that were temporary or outside of your control, including a medical emergency, you may still qualify.

“Those with credit scores of 640 or higher receive streamlined processing. Below 600, you’ll face tougher underwriting. You can qualify with a nontraditional credit history.”

Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below 600 must meet more stringent underwriting standards. And those without a credit score can qualify with “nontraditional” credit references, such as rental and utility payment histories.

How USDA-issued Home Loans Work?

Going one step further in helping prospective homebuyers, the USDA issues mortgages to applicants deemed to have the greatest need. That means an individual or family that:
•Is without “decent, safe and sanitary housing”
•Is unable to secure a home loan from traditional sources
•Has an adjusted income at or below the low-income limit for the area where they live.

The USDA usually issues direct loans for homes of 1,800 square feet or less, with a market value below the area loan limit. Again, that’s a moving target depending on where you live. Home loans can be as high as $500,000 or more in pricey real estate markets like California and Hawaii, and as low as just over $100,000 in parts of rural America. A loan limit of $216,840 is typical in many areas of the country.

Eligible home locations

Metropolitan areas are generally excluded from USDA programs, but pockets of opportunity can exist in suburbs. Rural locations are always eligible. Check out USDA rural development property eligibility areas here. ********

Next steps

To apply for a USDA-backed loan, Call The Scott Miller Team Scott Miller 612-751-7268 Scott Gruel 612-599-1993