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USDA Home Loan Requirements
Getting a house is probably one of the biggest accomplishments that most people can every do in their lifetime. However, getting one is not as easy as it seems. The best chance for you to get a home is by getting a mortgage. Applying for a mortgage however, can be a tedious process. You have to prepare your finances beforehand to make sure that your mortgage would be processed in time. Certain charges such as the closing costs and the down payment need to be settled once you apply for a home loan. But what if there's a way for you to get a loan even without making a down payment?
The United States Department of Agriculture has made a program that aims to assist low-income borrowers in getting a mortgage in select rural areas. It was originally made to develop rural areas by providing loan assistance to certain locations. Since then, the USDA guaranteed loans has become a great alternative for eligible borrowers to get into their dream house. But what does it take to apply for a USDA home loan?
The real estate property must be located in a certain area that's considered rural by the USDA. You may try to get in touch with the USDA local office in your area to find out which ones are eligible for USDA.
The home loan program is only available for purchase transaction alone. It can't be used to purchase any investment properties or even second homes.
The home loan program is available for both 1st-times borrowers or even those who have an existing USDA loan.
The borrower can receive 100 percent financing without making any down payment.
There is no minimum credit history required. However, the loan applicant should have a fairly good credit history. The loan underwriter should also review the borrower's credit score to check his or her repayment feasibility by using the Debt to income ratio of the borrower's gross income to get a complete picture of the household's existing debt.
The buyer's generated income together with the co-buyer and the working adults in the same property should not exceed 115 percent of the area's average generated income.
Single family houses are the only ones that can be financed by the USDA.
The mortgage term may last from 30 to 33 years and are always set on fixed rate.