Arizona USDA Loans

What are Arizona USDA Loans?

 The United States Department of Agriculture more commonly known as USDA offers borrowers a low cost rural home loan mortgage.  A USDA mortgage is an ideal loan product for those wanting a 100% no money down home loan. There are several other great features such has low mortgage insurance. The monthly factor is .50 compared to that of FHA which is .85 thus making the monthly payments lower allowing borrowers to afford more home for the same price. Another feature that makes the USDA Loan so attractive is the flexible credit requirements. A borrower only has to be removed 3 years from a foreclosure or short sale.

 What Types of Loans does USDA offer in Arizona?

 Currently, there are two kinds of USDA Home Loans available in Arizona for single family households:

 USDA Guaranteed Home Mortgage Loans are the most common type of USDA Loan in Arizona 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. Area income limits for this program can be viewed here. All USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.

 USDA Direct Housing Loans are less common than USDA Guaranteed Loans and are only available for low and very low income households to obtain homeownership, 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. Click here to see area income limits for this program.

 What factors determine if I am eligible for an Arizona Rural Development Loan?

 There are several things to determine a borrower’s eligibility.  The first thing to consider is credit score. While USDA doesn’t set a min score most lenders require a 640 or better score.  The next is debt to income ratio. A standard approval requires a housing ration of no more than 29%. This means that the total home payment each month cannot exceed 29% of the borrower’s gross income. Additionally a borrower’s total debt including housing payment cannot exceed 41% of the monthly gross income. 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. Maximum USDA Guaranteed Loan income limits for your area can be found at here. Maximum USDA Direct Loan income limits for your area can be found at here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.

What is the maximum amount that I can borrow?

 The maximum amount for an USDA home loan is determined by:

 USDA Loans actually do not have a maximum loan amount. The debt to income ratio will determine the max loan amount on each loan because the borrower’s will be limited on loan amount by the ratios set forth. As stated earlier the max ratios are 29% and 41%. Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Guaranteed Loan income limits for your area can be found at here.

Maximum financing: The maximum USDA Rural Development Loan amount is 102% of the appraised value of the home (100% plus the 2% USDA RD Loan guarantee fee).

 How much money will I need for the down payment and closing costs?

 USDA Rural home loans do not require a down payment. Borrowers can get 100% no money down loans.

 What are the allowable property types for USDA Home Loans?

 USDA requires all loans to be for Owner Occupied properties. The different types of allowable properties are SFR, Condos, Manufactured Homes, and PUD’s. Lenders will decide on each property type as to if they will loan on those certain properties.