Are you looking to buy your first house and want a 100% financing program that has flexible requirements? If so, a USDA loan might just right for you. As long as you are not looking to purchase a city home, you could benefit from the great deals you can have with this type of loan program.
A USDA loan is for any eligible borrower. Borrowers don’t have to be first-time home buyers. As long as you don’t own a main residence and will live in the house you bought with the USDA loan, you can apply for this financing.
There are flexible guidelines set by the USDA in their loans since the department guarantees the loan for the lenders. In case of a loan default, the USDA pays the unpaid loan and takes possession of the house. This is the reason a lot of first-time home buyers take advantage of this program.
How to be Eligible for USDA Loans
Before applying for a USDA loan, it is important to determine your eligibility. You are eligible if you have a household income that is less than 115% of your area’s average income. A household income is only a concern if somebody lives with aside from your co-borrower. For instance, if your parents live in the house with you, their income must also be considered. This is because the USDA recognizes the possibility of families to help out in taking care of the family’s bills. Since the USDA loan is for people who have less than average income, household income could be a reason a borrower could get disqualified. To make sure you are eligible, determine your total household income and compare it to your area’s average. Get more related tips at www.usdaloan.com.
How to Qualify for the Loan
Qualifying for USDA financing is not as complicated as when you apply for other types of loans. This is because the loan program has relaxed guidelines. You can be qualified for this loan if:
- Your credit score is at least 640.
- You have a maximum housing ratio of 29%
- Your maximum total debt ratio is 41%.
- You have been employed by the same employer for the last two years and that you have a stable income.
- You have a good credit history.
If you meet these requirements, you are guaranteed to qualify for a USDA loan and don’t need to secure a down payment to buy a house. You just have to worry about the closing costs and the upfront funding fee. But, you can arrange the closing costs to be included in your mortgage loan.
Requirements for the Property you can Buy with USDA Financing
The house you buy with USDA financing should meet certain requirements such as the following:
- The house should be located within the rural boundaries of the USDA. These boundaries don’t need to be in the cornfields. There are a lot of areas the USDA considers rural.
- The house should be in good condition. You can finance a home purchase with a USDA loan if the house is livable immediately. It should be modest and pass a USDA-approved appraisal.