|
 |
What is a USDA
Loan? |
|
|
|
A USDA loan is a
loan program insured by the Federal
Government (US Department of
Agriculture) and is designed to help
those families that desire to own a
home in small communities or in
rural areas. |
|
|
|
Are these loans only available in rural
areas? |
|
|
|
There are many areas just outside major
metropolitan areas that will still qualify.
These outlying areas are still considered
small communities. |
|
|
|
What is the difference between a USDA Loan
and a Rural Development Loan? |
|
|
|
They are the exact same thing; however
different regions may use one or the other
terms more specifically. |
|
|
|
How much down payment do I need? |
|
|
|
Loan terms are for 100% financing therefore
no down payment is required. |
|
|
|
Do I need any
money? |
|
|
|
Loan terms include 100%
financing, however there are closing costs
associated with the loan. In most instances
the seller can or will pay the part or
all of the closing costs. When a seller will
not pay the costs and the home appraises for
more than the purchase price then the costs
can be financed into the loan (not to exceed
the appraised value). This means that
technically a buyer can purchase a home with
absolutely no money of their own. |
|
|
|
Is there a limit to what the seller can pay? |
|
|
|
There is no limit to what the seller can
pay. |
|
|
|
What is PMI? |
|
|
|
PMI is a form of insurance that is used to
offset losses that a lender will incur if
and when a borrower fails to pay their home
loan. Conventional loans refer to this
insurance as PMI, FHA loans refer to this
insurance as MIP, and VA loans refer to this
insurance as Funding Fees. The borrower
typically pays this fee upfront or monthly
and in some cases both when they do not make
at least a 20% down payment. |
|
|
|
Why do USDA loans not require PMI? |
|
|
|
There is no monthly PMI, however USDA loans
require a 2% Guarantee Fee that is financed
into the loan. Since there is no monthly PMI
the mortgage payments are typically less
than other loans. |
|
|
|
Why does the government only offer these
loan in certain areas? |
|
|
|
Typically smaller communities do not have
the lending presence that a major
metropolitan area may have available, so the
government is trying to promote living in
these smaller communities. |
|
|
|
Are there income limitations? |
|
|
|
Yes there are income limitations. Those that
exceed the income limitations can usually
very easily qualify for home financing using
traditional lending programs. Income
limitations are based on family size, and
vary by State and County. For example a
typical county in Missouri with a family of
four can have an annual income of roughly
$71,000 (some Counties allow up to $79,000),
and a family of six range by County from
$82,000 to $91,250. |
|
|
|
What income counts toward the income
limitations? |
|
|
|
Typically all household income is included,
but there are adjustments made to the income
guidelines for dependent children, age, full
time students, disabled or handicapped
persons, etc… |
|
|
|
Are USDA loans only for purchasing a home? |
|
|
|
You can refinance an existing USDA loan. |
|
|
|
Is there a maximum loan amount? |
|
|
|
No, there are no loan limits on Guaranteed
Rural Development loans provided the income
requirements are met and the qualifying
income warrants the loan amount. |
|
|
|
What are the rates and terms available on
USDA loans? |
|
|
|
30 year fixed interest rate…no exceptions.
Interest rates may vary by region, and are
typical market rates. |
|
|
|
How much are the closing costs? |
|
|
|
Closing costs are
typical for each area and are the
same as similar transactions such as
FHA or VA loans. |
|
|
|
Do I need a perfect credit history? |
|
|
|
A good credit history is desired, however
there are exceptions based on individual
circumstance. Credit waivers can be issued
if there is not a consistent pattern of
credit delinquency. |
|
|
|
Who is eligible for a USDA loan? |
|
|
|
Qualifying borrower must be a US Citizen, a
US Non Citizen National or have a qualified
Alien status. |
|
|
|
Are there other eligibility requirements? |
|
|
|
Borrowers must be at least 18 years of age,
not own adequate house in the local
commuting area, must occupy as the primary
residence on a permanent basis, and be
unable to obtain conventional financing with
a 20% down payment. |
Equal
Opportunity Lender
