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USDA Home Loan

The Section 502 Guaranteed Loan Program provided eligible applicants with the opportunity to purchase, build, rehabilitate, improve or relocate a dwelling in an eligible rural area with 100% financing.

What are the benefits of a USDA Loan?

  • Zero Down Payment: No need to save for a hefty down payment, making homeownership more accessible.
  • Competitive Interest Rates: Often lower than conventional loans, leading to substantial savings over time.
  • Flexible Credit Requirements: Easier qualification process, even for those with less-than-perfect credit.
  • Low Mortgage Insurance Premiums: Keeps overall loan costs down.
  • Ideal for Rural and Suburban Areas: Tailored for properties in these regions, promoting rural development.
  • Streamlined Process: Simplified approval process, making the path to homeownership smoother and quicker.

Who's eligible?

Applicants must:

  • cannot exceed 115% of median household income
  • income from all household members is included
  • Agree to personally occupy the dwelling as their primary residence
  • Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien

What are the property requirements?

  • Location: The property must be in an eligible rural or suburban area as defined by the USDA.
  • Type of Property: Must be a single-family home intended as the buyer's primary residence. Some townhomes and condos may qualify.
  • Condition: The home should meet USDA's safety, sanitary, and structural standards. It must be in good condition, free from major repairs.
  • Size: Generally, the property should be modest in size relative to the area and comparable properties.
  • Adequate Water and Waste Systems: Must have safe water supply and waste disposal systems.
  • Access: The property must have direct access to a street, road, or driveway.
  • No Income-Producing Land: The property cannot include buildings or land used for income-producing activities, such as farming or commercial enterprises.

What is the Process?

1

Approval Nuances - Thing to Know

This is a comprehensive list of nuances that a borrower may run into when trying to get approved for a USDA loan.

  • Income Limits: USDA loans have income eligibility limits based on the area's median income. Borrowers must fall within these limits, which vary by location and household size.
  • Debt-to-Income Ratio (DTI): Generally, the USDA prefers a DTI ratio of 41% or lower, though higher ratios may be considered with compensating factors, such as strong credit or savings.
  • Credit Score: While there is no strict minimum credit score, a score of 640 or higher typically streamlines the approval process through the USDA's automated underwriting system. Lower scores might require manual underwriting and additional documentation.
  • Primary Residence: The loan must be for a primary residence, not for a second home or investment property.
  • Employment History: A stable employment history, usually of at least two years, is preferred. Gaps in employment may require explanation and documentation.
  • Asset Limits: Although there are no specific asset limits, having significant liquid assets may impact eligibility, as USDA loans are intended for those with moderate means.
  • Property Condition: The property must meet USDA standards for safety and livability. Any major issues must be addressed before loan approval.
  • Mortgage Insurance: USDA loans require both an upfront guarantee fee and an annual fee, which can affect overall loan costs and monthly payments.
  • Residency: Borrowers must be U.S. citizens, U.S. non-citizen nationals, or qualified aliens.

Additional Information:

About Me:


My name is Melissa Holt and I've been helping clients with home financing since 2001! I was a bank and retail lender for over 22 years and I now run my own broker business so I can help even more families! If you wish to learn about benefits of working with a broker, click HERE.

When I'm not working, I'm running between soccer practices and games, camping, visiting with friends or working on home projects. I love music and dancing! My passion is people and puzzles are my game!

Melissa J. Holt; NMLS #331083; [email protected]
Empire Home Loans, Inc. NMLS #1839243

PHONE: (425) 753-4247

Empire Home Loans, Inc., NMLS ID#1839243, CA DRE# 02086593, CFL License #60DBO-95315, AZ Lic: MB-1012019. Refer to www.nmlsconsumeraccess.org to see additional licensing information. The corporate office address is 4401 Hazel Ave., Ste. 135, Fair Oaks, CA 95628; www.empirehomeloans.com. This communication is for informational purposes only. This is not a commitment to lend. All programs are subject to change or cancellation at any time and without notice. Empire Home Loans, Inc. supports equal housing opportunity.