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USDA Rural Development Home Loans FAQ's
What is the maximum loan amount of a USDA home loan?
There is no set limit in the USDA guidelines. The amount will be set by the lender you work with, and depend on your debt to income ratio, credit score, income, current assets, as well as payment history of previous mortgages or rent.
Reference the USDA site to research income eligibility based on different types of home for each county throughout the country.
Traditionally, the USDA sets limits the debt-to-income ratio at 41%, but if you have a credit score above 660 and can prove a history of stable employment, you may have more flexibility in your qualification for a higher loan amount.
Can the closing costs of a USDA home loan be financed into the loan?
Yes! You are allowed to finance the closing costs into the overall cost of the mortgage. Closing costs may include items such as origination fees, title insurance fees, credit repair costs, lenders fees, notary fees, and escrow fees.
Is mortgage insurance required for USDA home loans?
Yes, because no down payment is required for USDA home loans, mortgage insurance is mandatory. However, the mortgage insurance for a USDA home loan is traditionally much lower than it is for an FHA loan or conventional loan.
What’s the minimum credit score to qualify for a USDA home loan?
Our minimum credit score is 600. That is significantly lower than a conventional loan and often times lower than most FHA loans Additionally, it’s wise to have documentation that proves stable employment, and recent history of making consistent rental or mortgage payments.
Am I allowed to use USDA home loans on an investment property?
No, USDA loans can only be used for primary residences. Vacation homes, farms, and other types of real estate that are not meant to be used as a primary residence are not allowed.
What kind of homes can be purchased with a USDA home loan?
USDA home loans can be used to purchase a single-family home, new manufactured homes (additional appraisals may be required), and condos. The home must be owner-occupied. Homes purchased with a USDA home loan must be “decent, safe, and sanitary.” It needs to have working mechanical systems and be free of termites.
Are USDA home loans only available to first-time homebuyers?
No, USDA loans have no restrictions regarding previous homeownership.
Who is eligible for a USDA home loan?
USDA loans are available to borrowers of low–moderate income levels who want a home in a rural part of the United States. The income level is determined by each county, and the amount of people in your family. Check out the USDA eligibility map and income guidelines to see if you qualify.
Are down payments required for USDA home loans?
No. One of the most popular features of USDA home loans is that no down payment is required—100% financing available!
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