What Is a USDA Loan?
USDA loans are loans backed by the United States Department of Agriculture. They are Guaranteed by the USDA to the mortgage lender, ensuring that the mortgage lender will receive a guaranteed sum of money even if the borrower does not repay the loan. Because of this, they require no down payment.
Who Qualifies For a USDA Loan?
USDA loans are income driven, which means that your annual household cannot be below or above a certain amount. The point of these loans is to provide affordable housing in areas where high incomes may not exist. A borrowers credit typically has to be 620 or higher. Due to the no down payment feature and the fact the loan is geared towards moderate income borrowers, if you have a significant amount of savings (typically 20% or more) you will be ineligible for a USDA no down payment loan.
What Homes Are Eligible?
These loans are designed for borrowers that live in rural communities. You will not find them being issued in urban areas, the USDA requires that the be population be less than 20,000 to be considered an eligible area.
Here is a map of North East Wisconsin’s Eligible USDA areas:
If you have a home you are interested in you can also look up the address here.
What Are The Income Limits For USDA Loans?
Income limits vary by county and state, each state has it’s own CMI (county median income) and the USDA uses this to calculate what they think would be the best limits. You can check each counties income limits by clicking here.
What Homes Qualify For a USDA Loan?
Because these loans are used to moderate income families to establish residency, they can only be used for single family, owner occupied purchases. No investments allowed.
What Are The Differences Between USDA and Conventional / FHA ?
Simply put, the USDA loan is different from Conventional Loans and FHA Loans because it has no down payment and the monthly mortgage insurance is lower. Also conventional loans and FHA loans do not have income or location restrictions.
Can You Pay Your USDA Loan Off Early?
Yes, there are no restrictions on pre-payment. Feel free to pay as much as you want whenever you want. You can also refinance your USDA loan anytime you want (as long as it’s beneficial)
How Do I Apply For a USDA Loan?
Not all lenders are qualified to issue these loans. If you would like to see if you qualify you can Apply here. I am available to discuss it anytime.