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An Alabama USDA loan is a home loan that is backed by the United States Department of Agriculture. The loan is designed for residents in Alabama and across the U.S. that are low to moderate-income and live or plan to live in a rural area
There are several benefits to the USDA loan that Alabama homebuyers should be aware of. The primary benefit of the USDA loan is that it offers a 100% no money down feature. The USDA loan is the only nonveteran loan that offers no money down. Additionally, the USDA home loan offers flexible credit features for home buyers.
No, you do not have to be a first-time homebuyer to obtain a USDA rural development loan. While homebuyers do not have to be first-time homebuyers there is a catch for move-up buyers. If someone currently has a home they must sell that home before closing on their new home with the USDA loan. The USDA rural development loan does not allow individuals to own two homes at the same time in most cases.
The USDA guaranteed loan is the most common type of USDA home loan. This is when a homebuyer works with a private mortgage lender or bank to obtain the USDA loan. The mortgage lender lends the money but the USDA guarantees or backs the loan. The USDA still makes the underwriting rules for this loan product. The USDA direct home loan is when a homebuyer works directly with their local USDA office to obtain a USDA loan.
The USDA loan Alabama does not have a maximum amount of acreage requirement. While there is not a rule on the amount of acreage a home can have homebuyers still must be cautious for two main reasons. One reason is that if the land starts to hold more value than the home in a transaction it's viewed more as a land loan that does not fall under this program. The rule of thumb is that the value of the land should not exceed 30% of the total value of the transaction. The second area of concern with excess acreage is finding comparable sales. It's harder to find the needed comps when there is additional land.
The Alabama rural development home loan does not have a minimum credit score. This is left up to the lender to decide what their score requirements are. Most lenders set their credit scores at 620-660
Determining an Alabama property's eligibility is very easy. Homebuyers just need to go to the USDA eligibility map and search by specific address. If they do not have a specific address, they can use the map to search general areas. The map is very user friendly and very self-explanatory.
Yes, foreclosed homes are eligible for the rural development home loan. The thing that homebuyers should pay attention to when looking at a foreclosed home for purchase is the condition of the property. It’s not uncommon for homes that have gone through foreclosure to have damage and the rural development home loan will require all repairs to be made before closing.
It will depend on the individual lender however most lenders do not require an application fee.
The USDA mortgage rates are usually about the same as FHA and VA mortgage rates. Mortgage rates will vary from lender to lender. The competitive environment of mortgage lending usually keeps most mortgage lenders very similar on the rate.
Homebuyers are not required to put money down on the Alabama USDA loan but may do so. The benefit of putting money down is that it will lower the amount financed and in turn lower the monthly payments.
Yes, swimming pools are allowed with the USDA home loan. They must be functioning and in working order. They cannot have any damage or safety issues.
The USDA mortgage has a unique requirement that most other home loan programs do not have. Since the program by definition is for low to moderate-income families in rural areas the USDA confirms the household income to ensure that it is not over 115% of the median income of a given area. This will vary from county to county and state to state. For example, if the median income is $68,000 then 115% of this is $71,300.
The USDA home loan in Alabama does not have a maximum sales price. If a home buyer can meet the debt-to-income ratio requirements and the household income requirements they can purchase at any price point.
Yes, homebuyers that have had a previous foreclosure are eligible after they are three years removed.
Yes, the seller can pay up to 6% of the sales price towards the buyers closing costs. For example, on a transaction where the sales price is $105,000 the seller can pay up to $6,300 towards the buyers closing costs. In most cases, this will be enough to cover everything.
The Alabama USDA home loan does not have mortgage insurance but does have what’s called a guarantee fee. There is a 1% upfront guarantee fee that is added to the total loan amount and a yearly guarantee fee that is paid out monthly. These fees are how the program is funded.
Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.