What is a USDA Mortgage?

USDA, it isn’t just for that prime steak you’re looking to throw on your BBQ. It stands for United States Department of Agriculture.

How does that have anything to do with a mortgage? A USDA Mortgage provides low-cost, low rate, insured home mortgages for people who want to become home owners in rural areas.

A USDA home loan might be right for you if you want to live in a rural area and purchase a home with no down payment. The other great thing about a no money down USDA mortgage is that it’s very similar to an FHA Mortgage when it comes to your credit. A USDA home loan from http://www.usdamortgageonline.com can give you peace of mind with no down payment and great 30 year fixed interest rates.

 

What Types of Loans does USDA offer?

Currently, there are two kinds of USDA home loans available for single family households:


USDA Guaranteed Rural Housing Loans:

USDA Guaranteed Loans are the most common type of USDA home loan and allow for higher income limits and 100% financing for home purchases. USDA Guaranteed Loan applicants may have an income of up to 115% of the median household income for the area.

 

 

Contact Us to see if you qualify under your area’s income limits for this program.


USDA Direct Rural Housing Loans:

USDA Direct Housing Loans are only available for low and very low income households to obtain home-ownership, as defined by the USDA. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Contact Us to find out what the area income limits are for this program in your area.


What are the advantages of USDA home loans versus  Conventional Loans?

USDA home loans offer many benefits and protections that you won’t find in other loans including:

USDA loan requirements are not totally credit score driven, although it is required to have at least a 620 FICO score to obtain an approval with most lenders. USDA loan guidelines are written in a way that provides the borrower the benefit of the doubt that there had been, at some point in their past, circumstances beyond their control, and as long as the borrower has recovered from those circumstances in a reasonable manner, they’re generally going to be credit-eligible for a USDA mortgage.


USDA Rural Loans NOW require Monthly Mortgage Insurance:

As of October 1st, 2011, all USDA loans require monthly mortgage insurance (MI). The daily USDA Mortgage Rates are usually lower than a conforming 30-Year Fixed loan and very comparable to a 30 year fixed FHA Mortgage!


USDA loans do not require a Down Payment:

USDA Mortgages do not require a down payment making it one of the two true No Money Down mortgage programs available. Other loan programs don’t allow this. A conventional loan will require anywhere from 3% to 5% down, an FHA Mortgage is going to require 3.5% and a VA Mortgage is the other no money down option available.


What factors determine if I am eligible for an USDA Loan?

To be eligible for an USDA home Loan, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. At least a 620 FICO credit score is required to obtain an USDA approval. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios can be exceeded somewhat with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. To find out what the Maximum USDA Guaranteed Loan income limits are for your area, Contact Us. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.

 

 



See more on USDA loan requirements.

Q: What is the maximum amount that I can borrow?

A: The maximum amount for an USDA home loan is determined by:
There is no set maximum loan amount allowed for an USDA home Loan. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. You can find out what the Maximum USDA Guaranteed Loan income limits are for your area by Contacting Us.


Q: What is the maximum financing?

A: The maximum USDA home Loan amount will be 102% of the appraised value of the home (100% plus the 2% USDA loan guarantee fee).

Q: Is there a minimum down payment required for a no USDA home Loan?

A: NO! USDA Loans require no down payment and they allow for the closing costs to be included in the loan amount as long as the appraised value supports it.


Q: What property types are allowed for USDA Mortgages?

A: USDA Mortgage Guidelines require that the property be Owner Occupied and allow for the following property types: condos, planned unit developments and single family residences.

Q: Can I get an USDA loan after bankruptcy?

A: USDA loan guidelines state that if you have been discharged from a Chapter 7 bankruptcy for three years or more, you are eligible to apply for an USDA loan. USDA will also consider applicants for a mortgage with less than 3 years from discharge of a Chapter 7 Bankruptcy with extenuation circumstances. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make an USDA loan application.

To find out if you are eligible for a USDA loan Click here.


Why choose a USDA home loan?

• USDA loans require no down payment.
• There are no prepayment penalties for a USDA loan.
• USDA loans now have minimal monthly mortgage insurance.
• A USDA loan is available in all rural areas of the country, provided a market exists for the property and the home meets HUD’s minimum property standards.
• A USDA Home Loan may be used to purchase a new or existing one family home in rural areas.
• USDA loans are offered on a standard 30 year fixed rate term.


USDA home loans FAQs

Q: What is Considered a Rural Area by the USDA?
A: Rural areas include open country and places with population of 10,000 or less and—under certain conditions—towns and cities. To find out if the area you’re interested in is eligible, Contact Us.

Q: What is the Maximum Loan Amount for a USDA Loan?
A: None. However, it is limited by the appraised value, repayment ability (determined by your household income and debt to income ratios). Most lenders will limit USDA loans to the conventional loan limit of $417,000.00.

Q: What is the Maximum LTV for a USDA Loan?
A: It can be up to 100% LTV plus the Agency guarantee fee of 2%.

Q: Can Closing Costs be Financed into the Loan?
A: Yes, any difference between the contract price and the appraisal value can be used to finance normal closing costs.

Q: What is a USDA Loan Guarantee?
A: USDA Rural Development Single Family Housing Program serves as a safety net for mortgage lenders. The USDA provides the full faith and assurance of the U.S government that any financial loss resulting from servicing the loan will be reimbursed in full up to an amount not exceeding 90% of the original loan amount. All loss up to an amount not exceeding 35% of the original loan is fully reimbursed. Any loss amount exceeding the 35% is 85% reimbursed. This leaves the lender only 15% exposed on the loss amount above the 35% of original loan. In the majority of cases, the total loss does not exceed 35% of the original loan and the lenders are fully reimbursed. This guarantee provides lenders an expanded level of protection against losses. The quality of this guarantee allows lenders to easily sell the loans on the secondary market.

To find out if a USDA home loan is right for you,



 Eligible areas will not change until at least October 1, 2014!

 

When the 2010 Census maps were drawn up, and analyzed, many communities across the US were scheduled to lose their “rural” designation based on updating the USDA eligibility map.

I’ve personally spoken to a number of first time home buyers who have been told they have to go with an FHA Mortgage due to the uncertainty of what areas will remain eligible for the USDA Mortgage program.

They’ve been told things like the area isn’t going to qualify after October 1st, 2012 or my favorite lie, the interest rate on a USDA Mortgage is going to be higher than an FHA Mortgage. This is absolutely false. Even if it were true, you would still end up with a lower monthly mortgage payment because the monthly mortgage insurance on a USDA Mortgage is substantially cheaper than an FHA Mortgage.

I have great news! I just received the following email.

January 24th, 2014

Census Eligibility Maps

Barring Congressional action, USDA will begin using 2010 Census data to determine eligible rural areas for Rural Development housing programs on October 1, 2014.  Changes to eligible areas can be viewed by selecting the applicable program listed under “Future Eligible Areas” at http://eligibility.sc.egov.usda.gov.

NOTE:  Complete applications received prior to October 1, 2014, will continue to use the existing eligible rural area definitions based on 2000 Census data.

So this means the eligible areas will not change until at least October 1, 2014!

If your lender or real estate agent is telling you that you can not use a no money down USDA Mortgage to buy your home because of the eligibility concerns, it’s time to find a new lender. Don’t let your lender or agent pressure you into an FHA Mortgage or some other program that doesn’t benefit you just so they can meet a closing date. A USDA Mortgage is going to give you a lower monthly payment and a low 30 year fixed rate so take advantage of it while you can.

Feel free to call us at (877)228-9069 or contact us by using the form below for more information.

Comments or questions are welcome.

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How will the The Government Shutdown Affect USDA Mortgages?

 

Unfortunately The USDA has been affected by the government shutdown.

When the government shuts it down, they shut all of it down. The screen print below shows the USDA website is off line due to the government shut down. This pretty much tells you USDA is closed until the government figures out a new spending bill. If you applied for a USDA Mortgage and did not receive a loan commitment from USDA prior to the shutdown, you won’t until the government resumes normal operations.

Here’s what doesn’t make sense, FHA & VA are both still functioning so why not USDA or at least leave the web site active?

The good news is there are still resources available if you have questions regarding the no money down USDA mortgages during the government shutdown. You can call me at (877)228-9069 for more information or help.

Government Shut Down

Government Shutdown


Today’s USDA Home Loan Rates For October 19th, 2012

USDA Program Updated Rates

*Please note that USDA loan rates are subject to change daily.*

*We now have credit score tier specific USDA Mortgage Rates!*

*All USDA loan rates posted are based on 30 day locks. *

*Please note that the USDA home loan rates posted are subject to adjustments for the following criteria*

 

1) Loans under $100,000.00.

2) State specific adjustments.

 


USDA 30 year fixed Credit Score 620-639 Rate APR
No points 3.250 % 3.478%
Credit of .646 points 3.375% 3.554%
Credit of 1 points
3.500% 3.652%
USDA 30 year fixed Credit Score 640-659 Rate APR
Cost of 1.436 points 3.000% 3.335%
Cost of 1.2 points 3.125% 3.444%
Cost of 1 points
3.250% 3.556%
USDA 30 year fixed Credit Score 660-679 Rate APR
Cost of 1.436 points 3.000% 3.335%
Cost of 1.2 points 3.125% 3.444%
Credit of 1 points 3.250% 3.556%
USDA 30 year fixed Credit Score 680-699
Rate APR
Cost of 1.656 points 2.875% 3.225%
Cost of 1 points 3.000% 3.302%
Cost of .658 points 3.125% 3.403%
USDA 30 year fixed Credit Score 700-740
Rate APR
Cost of 1.933 points 2.750% 3.117%
Cost of .50 points 3.125% 3.390%
Credit of 2 points
3.25% 3.321%

 

Please call for additional USDA Mortgage Rate options.

If you have any questions or you would like to get pre-approved for a USDA mortgage please feel free to fill out the form below or call us at (877)228-9069.

Please remember to check your spam folder for important emails from us!

Comments or questions are welcome.

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Compare Today’s USDA Rates with Today’s FHA Rates and Today’s VA Rates

Today’s USDA Home Loan Rates are effective June 20th, 2012 and are subject to change without notice. Information provided is solely for use by licensed real estate agents, builders and consumer use but not for distribution. Rates and APR are accurate as of date shown above and subject to change without notice. *APR and rates are based on $200,000 loan amount and 30 day rate locks.

 

 

 

When the 2010 Census maps were drawn up, and analyzed, it showed  many communities across the US were scheduled to lose their “rural” designation based on updating the USDA eligibility map and that would cost them the  opportunity to qualify for the No Money Down USDA Mortgage starting October 1, 2012.

I’ve personally spoken to a number of first time home buyers who have been told they have to go with an FHA Mortgage due to the uncertainty of what areas will remain eligible for the USDA Mortgage program.

They’ve been told things like the area isn’t going to qualify after October 1st,2012 or my favorite lie, the interest rate on a USDA Mortgage is going to be higher than an FHA Mortgage. This is absolutely false. Even if it were true, you would still end up with a lower monthly mortgage payment because the monthly mortgage insurance on a USDA Mortgage is substantially cheaper than an FHA Mortgage.


I have great news! I just received the following email.

 

Action Alert

 

September 26, 2012

 

USDA Extends Rural Definition Until March 27, 2013

 

Dear Rural Advocates,


Yesterday, USDA issued a notice to all local, state, and national Rural Development staff instructing them to continue to use the current “rural” definition until March 27, 2013, and postponing implementation of data from the 2010 Census data until that time. This notice applies to all Rural Development programs, including those administered by the Rural Housing Service, the Rural Utilities Service, Rural Business Service and the No Money Down USDA Mortgage!

 

The new deadline–March 27, 2013–coincides with the expiration of the FY13 Continuing Resolution. This is a important victory for all rural advocates because it allows us to continue to work with Rep. Fortenberry to find a long-term solution to this issue when Congress returns to Capitol Hill after the November elections.

 

The notice also includes changes to the data USDA will use to verify income eligibility. Because the 2010 Census–and future Censuses–does not ask participants about their incomes, USDA will begin to use the 5-year American Community Survey estimates to determine income eligibility standards for the No Money Down USDA Mortgage. So this means the eligible areas will not change until at least March 27th, 2013.

 

If your lender or real estate agent is telling you that you can not use a no money down USDA Mortgage to buy your home because of the eligibility concerns, it’s time to find a new lender. Don’t let your lender or agent pressure you into an FHA Mortgage or some other program that doesn’t benefit you just so they can meet a closing date. A USDA Mortgage is going to give you a lower monthly payment and a low 30 year fixed rate so take advantage of it while you can.

 

Feel free to call us at (877)228-9069 or contact us by using the form below for more information.

Comments or questions are welcome.

* indicates required field


Feel free to call us at (877)228-9069 or contact us by using the form below for more information.

Comments or questions are welcome.

* indicates required field

 


USDA Mortgage Funding Update – 9/26/2012!

 

Back on August 21st, 2012, I posted an update regarding the availability of USDA Mortgage funding for refinance transactions. See that post by clicking the link below.

http://usdamortgageonline.com/usda-refinance-funds-have-been-exhausted-for-fiscal-year-2012/

 


I am pleased to announce that we are again closing and funding ALL USDA Mortgage loans using the Conditional Commitments from USDA!

 

USDA Rural Housing Funding Update

USDA Mortgage Online is pleased to announce that USDA Rural Development has authorized the issuance of Conditional Commitments for the Single Family Housing Guaranteed Loan Program so we can continue to close and fund USDA Mortgages even though most lenders have suspended the program.

This means we will continue to close and fund new USDA Mortgages while other lenders wait for more money to be appropriated to the Rural Development program! If you thought you missed out on buying a home with a USDA Mortgage, think again! We are still accepting, closing and funding USDA Mortgages!

We are excited to continue to offer our customers access to this excellent program.

Feel free to call us at (877)228-9069 or contact us by using the form below for more information.

Comments or questions are welcome.

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