USDA Loans is a government loan program for owner-occupant primary homes.
- Only certain areas that is designated by the USDA is available for USDA financing
- Not all designated areas are rural areas
- There are many suburban areas that is designated as eligible areas for a USDA loan
- Lenders offer 100% financing
- There is no down payment required on USDA loans
- Most of our borrowers do not pay closing costs out of pocket
- Closing costs can be covered with either a seller’s concession and/or lender credit
- Or a combination of both. Unlike other loan programs, not all areas are approved by the U.S. Department of Agriculture
- Only areas that are approved by USDA are eligible for USDA loans
Capital Lending Network, Inc. are experts in helping homebuyers qualify for USDA loans. CLN, unlike other mortgage companies, has no lender overlays on government and conventional loans. Therefore, CLN does not have any lender overlays on USDA loans.
What Are USDA Loans?
USDA loans are one of three government loan programs offered by the United States Department of Agriculture.
- The USDA Mortgage Loan Program was design to promote homeownership in rural and suburban areas for middle to lower-income families who cannot afford a home if it was not for this loan program
- The U.S. Department of Agriculture’s mortgage loan program is a government assistance loan program for homebuyers with limited income and families
- The USDA home mortgage program is also known as the USDA Rural Development Guaranteed Housing Loan Program which is under the U.S. Department of Agriculture
- Just in 2018, the Rural Development home mortgage program helped 132,000 middle to lower income families in rural and/or suburban areas purchase or upgrade their homes
The goal and mission of USDA’s Rural Development Program is to improve the economy and quality of life in rural America by promoting no down payment at very low rates home mortgages to those who never dreamed of ever owning a home.
Types Of USDA Loans
There are three different types of USDA home loan programs:
USDA Loan Guarantee Home Mortgage Program:
- The USDA Loan Guarantee Home Mortgage Program works just like FHA and VA loans
- A lender will originate, process, underwrite, and fund the USDA loan per USDA Agency Mortgage Guidelines
- The lender will offer 100% financing at competitive rates due to the government guarantee against default and/or foreclosure
- With USDA loans, the USDA will have one of their mortgage underwriters also underwrite the USDA loan prior to final approval
USDA Direct Loan Program:
- The USDA Direct Loan Program is a home mortgage program designed and launched to promote homeownership for lower income Americans at below market interest rates
- There are maximum income caps depending on the geographic region to qualify for the USDA Direct Loan Program
- With subsidies, interest rates can be as low as 1%
USDA Home Improvement Loans And Grants:
- Many homeowners in rural American have limited income. Families with a large household and limited household income often find it next to impossible to do home improvement projects
- The USDA Home Improvement Loan and Grant Program are financial assistance for homeowners in eligible rural and/or suburban areas approved by the USDA for them to repair and/or upgrade their homes
- This assistance loan program for homeowners come in either a loan or grant package or a combination of both for a maximum assistance of up to $27,000
All USDA loan programs have a maximum household income cap.
USDA Eligibility Requirements And Agency Mortgage Guidelines
Unlike other home mortgage programs where the higher the income, the better, USDA loans have a maximum household income ceiling.
- The income cap is dependent on the household income, the number of people in the household, and the geographical area of the country
- Some areas have a higher income limit than others
Here is how you can find out what the maximum household income ceiling by clicking this link USDA map and table.
Only primary owner-occupant homes qualify for USDA loans. Second homes and investment properties are not eligible.
Here are the list of eligibility requirements to qualify for USDA loans:
- U.S. citizen and/or legal permanent residence of the United States
- The front end debt to income ratio including the proposed P.I.T.I. ( principal, interest, insurance, taxes) cannot exceed 29%
- The back end debt to income ratio which is the P.I.T.I. plus all other monthly debt payments cannot exceed 41%
- Exceptions to the above debt to income ratios can be made by the USDA if the borrower has a credit score that is higher than 680 FICO
- The borrower’s employment history for the past two years will be carefully reviewed
- The likelihood to stay in the present employment for the next three years need to look promising
- Clean and timely payment history in the past twelve months is necessary
- Borrowers with lower credit scores and/or no credit scores can qualify for USDA loans
- Nontraditional credit can be used for borrowers with no credit scores
CLN has no lender overlays on USDA loans. As long as the borrower can get an approve/eligible per GUS, we just go off the findings of GUS and have no other lender overlays.
Getting Started And Qualify For A USDA Loan Today With A Lender With No Lender Overlays On USDA Loans
To get started and qualify for a USDA loan with a lender with no lender overlays on USDA loans, please contact us at Capital Lending Network, Inc. at 1-800-900-8569 or text us at 262-716-8151 for a faster response. Or email us at firstname.lastname@example.org. If you need more information about a USDA direct mortgage or a USDA home improvement loan and grant, contact your local regional USDA Rural Development office. The team at CLN are available 7 days a week, evenings, weekends, and holidays.