How to Get a USDA Loan
Why choose a USDA loan? A Section 502 Guaranteed Rural Housing Loan is a 30-year fixed-rate home loan that gives qualifying buyers a chance to purchase a home with 100-percent financing. As MoneyGeek indicates, the loans are issued by private lenders but backed by the USDA. As a result, both borrowers and the properties that they choose have to meet requirements set by the USDA. However, they also benefit from favorable terms. In fact, some loan experts consider USDA loans one of the mortgage industry’s best-kept secrets. Exploring how to get a USDA loan could put you on the path to homeownership.
What It Takes for a Borrower to Qualify for a USDA Loan
USDA loans aren’t right for everyone. As NextAdvisor reports, there are requirements that you have to meet if you’re going to use a USDA guaranteed loan to purchase a home:
- You must be either a U.S. citizen or a permanent resident.
- You should be able to show a history of reliable income spanning at least two years.
- You have to meet the USDA’s income limits. Generally, you cannot make more than 115 percent of the local median income. The incomes of all members of your household must be included. However, the cap is adjusted for the household’s size.
- Your monthly mortgage payment must be no more than 29 percent of your monthly income. Other monthly debt payments should not exceed 41 percent of your income.
What It Takes for a Property to Qualify for a USDA Loan
What requirements does the property that you hope to buy have to meet? The Mortgage Reports explains:
- It must be a primary residence. Investment properties, commercial properties, and vacation homes aren’t allowed.
- It must be a single-family home. Multi-unit structures like duplexes aren’t acceptable.
- It must be in an approved geographic location. While urban areas won’t make the cut, many suburban areas will. To find out if a particular property is eligible for a USDA loan, get the address. Then, go to the USDA’s Property Eligibility website and type it in.
How to Secure a USDA Loan
You’ve reviewed your housing goals and the eligibility requirements, and you’ve decided that a USDA guaranteed loan might be a great fit for your needs. Now, you’re wondering how to how to get a USDA loan. Smart Asset offers a handy guide:
- Get preapproved. A preapproval* shows real estate agents and sellers that you’re serious about buying a home. It also tells you how much you’ll be able to borrow, which helps you set your budget.
- Shop for a house. Choose a home. Be sure to check the USDA website to verify that it’s eligible for the USDA loan program.
- Put in your home loan application. Watch out for any requests for additional info. Be sure to answer quickly to keep your application on track.
- Wait for approval from the USDA. The lender refers the application for final review.
- Head to closing. When you close, you’ll sign the last of the paperwork and pay any closing costs. Then, you’ll take ownership of your home.
Are you interested in learning more about USDA loans? The loan experts at PrimeLending Dallas can help. Contact us today to discuss your housing goals.
*All loans subject to credit approval and identification of acceptable property. Conditions and restrictions may apply.