USDA Loans

What are USDA Home Loans?

USDA loans are zero-down-payment, low interest rate mortgages. The United States Department of Agriculture guarantees the loans. They help very low-to-moderate income buyers become homeowners. The home must be in a rural area, which the USDA defines as having a population under 35,000. There are a few suburban areas that meet the USDA criteria.

What are the Benefits of a USDA Home Loan?

The USDA loan program can bridge many of the obstacles you may face with a conventional home loan. The three major benefits are:

• Low rates – USDA loan rates are comparable to conventional loan rates and may at times be lower.
• No down payment required – Unlike conventional loans that usually require a 20% down payment, most USDA borrowers do not need to make a down payment. However, most are required to make a $1,000 investment at closing. You can use this $1,000 investment for earnest money or any transaction-related costs.
  
• No Private Mortgage Insurance (PMI) – Conventional loan borrowers who are unable to meet the lender’s down payment requirements typically must buy expensive PMI. With a USDA loan, you’re only required to pay a 1% upfront fee. You can choose to pay this fee in cash or roll it into your monthly mortgage payment. Additionally, your monthly mortgage payment will include a small USDA annual fee of 0.35% thereafter.

• USDA Home Loan Qualifications and Requirements

  To qualify for a USDA loan, you:

  • Do not have to be a first-time homebuyer
  • Do not have to be employed in the agricultural industry, even though the Department of Agriculture backs the loans
  • Must be a U.S. citizen or an eligible noncitizen (permanent resident)

  You are required to maintain an escrow account with your lender. The lender will use this account to pay the taxes and insurance on your loan.

  Are there USDA Credit Score requirements?

  There is credit score requirements for all Home Mortgage Loans. Talk with an Old Fort Banking Company Mortgage Loan Officer to determine if your credit score meets the requirements for a USDA Home Loan.

  USDA Home Loan Income Eligibility

  To be eligible for a USDA loan, you’ll need to meet three basic income criteria.

  • Your family income typically must be low or very low, as defined by the USDA. Eligibility Income Check - Worksheet You may still be eligible if you have a moderate family income
    Your family income meets the parameters necessary for your level of debt
  • There are Income Limits defined by USDA - USDA Income Limit Search
  • Your family income meets the parameters necessary for your level of debt
  • Your source of income is dependable

  Speak with a Mortgage Loan Officer to learn more about income eligibility.

  USDA Loan Property Requirements

  To be eligible for a USDA loan, your property must meet certain requirements.

  • It must be your primary residence
  • It is in a rural area, which the USDA defines as having a population under 35,000. There are a few select suburban areas that meet the USDA criteria.
  • Income-producing properties and vacation homes do not qualify.
  • A USDA-approved appraiser must appraise the property
    Property Eligibility Search by Address

  How can I apply for a USDA Home Loan?

  The USDA loan application is a bit different than the conventional loan application. One difference is a USDA loan can only be issued by USDA-approved lenders. Our loan officers are experienced with USDA loans and can help make the process easy for you. Contact our Mortgage Loan Officers to start the process!