What is a USDA Loan?
Applicants for home loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories. Additionally, the property must be located within the USDA RD Home Loan “footprint.” The USDA Home Loan maps are currently scheduled to be changed on January 15, 2014. USDA Loans offer 100% financing to qualified buyers, and allow for all closing costs to be either paid for by the seller or financed into the loan.
USDA Home Loans have Maximum Household Income Limits which vary by the County you purchase a home in. The Income Limits change annual changes, the next change is scheduled for February of 2014. The Maximum Household Income Limits are based upon everyone in the home who is a wage earner, even if their income is not going to be used to qualify for the USDA Loan. For instance, Social Security Income from an elderly relative living in the home, would be considered when determining the maximum household income – even if that relative was not going to apply to be on the mortgage loan. There are deductions however, that USDA Underwriters allow, and often times, those calculations will pull a family under the Maximum Household Income Limit.
To decide if you qualify for a USDA Mortgage Loan, we will look at:
- Your income and your monthly expenses. Standard debt-to-income ratios are at the discretion of the underwriter for USDA Loans. These ratios may be exceeded with compensation factors.
- Your credit history (this is important, but USDA credit standards are flexible). Your overall pattern rather than to individual problems you may have had.
To be eligible for an USDA mortgage, your monthly housing costs (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income. Your credit background will be fairly considered. At least a 620 FICO credit score is generally required to obtain an USDA approval. You must also have enough income to pay your housing costs plus all additional monthly debt.
USDA Loans allow you to borrower up to 103 percent of the appraised value. You would only be required to account for closing costs.
The interest rate for your home loan will be determined by the type of loan program that you qualify for and your credit score. You might be asking yourself what the formula to calculate interest rates is. Interest rates are driven off of Mortgage Backed Securities (MBS) which are commonly referred to “mortgage bonds”. These values of these bonds determine whether the interest rates rise or fall. Your final rate will determine your payment using the standard calculate mortgage payment formula. Please contact me to see what is today’s lending mortgage rate.
While USDA Mortgage Guidelines allow you to purchase warrantable condos, planned unit developments, modular homes, and 1-4 family residences. USDA Loans can be used to finance primary residences only.
Criteria for USDA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for two years or more, you are eligible to apply for an USDA mortgage. If you have had a Chapter 13 bankruptcy, it must be documented that the credit reputation has been re-established for at least one year to be eligible for a USDA Loan Application.
The maximum amount for an USDA Mortgage Loans are determined by the Maximum loan amount: The maximum loan amount allowed for an USDA Loan varies from county to county. To see what the limit is in the county in which you’re interested, visit the following site http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
Depending on the state where the property is located, the maximum USDA Mortgage amount will be 103% of the appraised value of the home or its selling price, whichever is lower.
If you’re not sure if you qualify for a USDA loan, you can contact me for live, customized USDA loan quote by completing the online application or by calling me at 843-375-6611