USDA Loans

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USDA Loans

Home Point Financial is pleased to announce we have USDA financing. This program is for low to moderate income families and allows 100% financing with no down payment. We are underwriting these loans at Home Point Financial speeds.

What is a USDA Loan?

USDA stands for United States Department of Agriculture. In the past, USDA Loans were considered “farm loans”, mostly used to purchase properties in agricultural areas. That is not the case with today’s USDA Loans. In fact, properties in almost every area of the country outside major metropolitan areas can be purchased with a zero-down USDA Loan today.

USDA Guaranteed Rural Housing Loans

USDA Guaranteed Loans are the most common type of USDA loan and allow 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.

What are the Advantages of USDA Mortgage Versus Conventional Loans?

  • USDA mortgage loans offer many benefits and protections that you won’t find in other loans including:
  • USDA Mortgages have more flexible credit qualifying terms
  • USDA Rural Loans require low monthly mortgage insurance (MI)
  • A distinct advantage of a USDA rural loan, as compared to a conforming loan, is great interest rates and low mortgage insurance (MI). The daily USDA mortgage rates are usually comparable to a conforming 30-Year Fixed loan
  • USDA Mortgages require no down payment

What Factors Determine if I am Eligible for a USDA Loan?

To meet USDA loan eligibility requirements, your monthly housing costs (mortgage principal and interest, property taxes and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. At least a 640 FICO credit score is required to obtain a USDA approval through most lenders. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). 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 here. Families must be able to afford the mortgage payments, including taxes and insurance.

Can I get a USDA Mortgage Loan After Bankruptcy?

Criteria for USDA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for three years or more, you are eligible to apply for a USDA mortgage. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make a USDA loan application.

What are the USDA Down Payment Requirements?

USDA Mortgages have no down payment requirement.

What Types of Property are Eligible?

While USDA Mortgage Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.

What is Considered a Rural Area by the USDA?

Rural areas include open country and places with population of 10,000 or less and—under certain conditions—towns and cities. There is an automated rural area eligibility calculator at: http://eligibility.sc.egov.usda.gov.