Do You Qualify For A USDA Home Loan?

Building, buying or selling real estate

The USDA Home Loan Program is a housing payment assistance program for families in rural areas subsidized by The United States Department of Agriculture. The purpose of the program is to empower working class families with the means to borrow money to purchase safe, sanitary housing in rural regions.

 

Location, Location, Location

This is the key motto in the real estate market, and this couldn’t be more true with respect to qualifying for a USDA Home Loan. These loan programs are only available for properties in low density population areas. This excludes cities and suburban areas from participating in the program. You must purchase a home outside of the city to qualify.


Property Eligibility Restrictions

Because of certain income limits, the value is also limited for homes that are purchased. USDA eligible home buyers include only those people with lower incomes. Only lower valued homes will be eligible for the loan. There are generally size restrictions for the home.

The property mustn’t be designed to be used for business purposes. It must be a standard family home. The grounds cannot contain any sort of in ground pools. The property must also be priced at a value equal of less than the value of the property. Money will not be loaned in excess of the assessed valuation of the property.

 

Personal Eligibility Restrictions

Qualified applicants are those who are only currently without sturdy, safe, sanitary housing. They must also fall below a certain income limit. They must plan to occupy the residence that is being purchased with the loan as a primary resident.

Legal requirements must also be met. There are citizenship requirements and additional guidelines for non-citizens. They must also have legal capacity to understand loan responsibility. Applicants will not be considered who have been disbarred in participating from Federal Programs.

 

What type of USDA home loan should I use?

Currently the USDA offers two types of loans for single family home mortgages. The Single Family Housing Direct Home Loan assists low income families to purchase a home through financing and subsidies. The Single Family Housing Guaranteed Home Loan will help families in need of refinancing. It also helps families in the construction of new homes. If you are unsure which home loan to apply for, consult a real estate agent with experience in USDA home loan purchases.


USDA Single Family Direct Rural Home Loans

Direct home loans are most often used by low income families to purchase a home. It helps lenders extend financing by offering a subsidy toward repayment of the loan. The subsidy helps the homebuyer to reduce the amount of payments for a short duration. Another option for reducing the payment allows borrowers to extend the length of the loan repayment. These loans can often be written for 33 or 38 years. Qualified applicants must demonstrate a need for housing. They must meet certain income criteria and creditworthiness.

Direct home loans are also extended to low income families for other reasons. The loan money may also be used by families who own a home that is in need of repairs or renovations. Money can also be used for relocating existing structures. In some circumstances, the money may also be used to improve vacant lots to meet building requirements. Loans can be used to prepare a sight for building or relocation. These cost may include grading work, or well and sewage construction.

 

USDA Single Family Guaranteed Home Loans

Guaranteed home loans are available to low income families who wish to refinance an existing mortgage. This loan helps low income families who may be having difficulty maintaining their monthly mortgage payment. The USDA guarantees 90% of the loan allowing for financial institutions to reduce their lending risks. Families who refinance with a USDA Single Family Guaranteed Home Loan will lower their payments, and extend their time to pay it back. This is a great program for families who are at risk for foreclosure in rural areas.

New home constructions can also be financed with the USDA Single Family Guaranteed home loan. Families can purchase new homes and finance closing costs. Some families may be eligible to obtain financing to build a home. New construction costs can include site preparation, design, and contracting fees associated with the build.

Guaranteed loans are also sometimes granted to individuals who require accommodation for a disability.  Sometimes families will need to renovate homes for different reasons. Wheelchair accessibility will often require renovations to restrooms, entryways, stairways, doorways, kitchens, and bedrooms. Other disabilities may require the installation of hand rails and other safety features. It is important that disabled people are able to live comfortably in their homes. Many disabled individuals do fall into a lower income bracket. They may not otherwise be able to afford renovations. The USDA Single Family Guaranteed home loan has helped many people receive the accommodations they need.

 

How much money can be borrowed with a USDA home loan?

Many USDA home loans can be written to cover the full cost of the home or construction. The loans are typically limited to lower priced and smaller family homes. The low income requirement combined with creditworthiness will factor into the limit which an individual can borrow. Under no circumstance can an individual borrow more than the amount of the home. The price of the home must not exceed its fair market value.

 

Where do I apply for a USDA home loan?

USDA home loans are only available through qualified lenders that meet the requirements of the program. You will want to find both a lender, and a real estate agent familiar with processing USDA home loans. Lenders and real estate agents can be searched for online. It is always best to try to find a local agent and lender, as they will have the most expertise on the guidelines for a particular area. USDA participating real estate agents will be able to refer you to lenders and explain your options.

For more information on the USDA Single Family loan, and additional loans outlined through USDA, visit http://www.usda.gov .

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