USDA Loan

From 1st Colorado Mortgage Solutions

What is a USDA Loan?

If you are looking for a home loan without a down payment, a USDA loan could very well be your best pick. The USDA program was created for borrowers who are looking for a property in a rural market or small town. Prospective homebuyers can purchase a home with a down payment as low as 0% with the USDA loan. Although Denver properties do not qualify for USDA Rural Housing Loans, there are many surrounding areas that do.

USDA Loan Benefits

  • Up to 100% financing

  • Low monthly mortgage insurance rate at 0.4%

  • Easier qualifying than most other programs

  • Seller concessions allowed to help closing costs

  • Low 30-year fixed rates

USDA Requirements

  • Credit score around 620-640 (?)

  • Property must be in a USDA eligible area, generally a rural location or town of 20,000

  • A steady job and income are generally required

  • Must fall under the USDA income limits, which applies to the entire household, regardless of who is on the mortgage.

There is a 2% USDA guarantee fee that is assessed at closing, but is typically rolled into the new loan amount. In addition, seller-paid closing costs are allowed which can enable you to purchase a home with little or no money out of pocket.
You cannot own another home currently, in order to qualify for USDA Rural Housing Loans. The property must be located in a USDA Eligible Area, generally a rural location or a smaller town with under 20,000 residents. In addition to the home meeting eligibility, the home buyer must fall under USDA income limits in order to qualify. The limit is applied to the entire household income, regardless of who is on the mortgage, and some deductions are allowed for things like child care.

How does it work?

USDA home loans are originated by the federal government, but they are serviced through direct lenders. The repayment of the loan is guaranteed by the United States Department of Agriculture. This means you can use any traditional mortgage lender, but the loan must meet the USDA loan guidelines in effect at the time of the mortgage origination.
The application process for a USDA loan is essentially the same as any other loan, but the lender must ensure that you and the property both qualify for the USDA program. Eligibility of the property itself is determined not by the potential buyer, but by the location of the property.

Will you qualify?

Your ability to get a USDA loan is determined by your financial history. If you are a United States citizen and have a solid credit history (the usual qualifying score is between 620 and 640) and meet the usual income requirements, you can be qualified for USDA loan (presuming the home is located in a rural area covered by USDA loans). A steady job with a reasonable income is generally required for a loan approval.

USDA Loan Purchase

USDA Rural Housing Loans are one of the best programs available right now and one of the last remaining 100% financing options in the marketplace. The USDA loan purpose is to prove low-to-moderate income households the opportunity to achieve the goal of homeownership. The low rates and payment on this program make it an attractive option.

USDA Benefits

  • Up to 100% financing

  • Low monthly mortgage insurance rate at 0.4%

  • Easier qualifying than most other programs

  • Seller concessions allowed to help closing costs

  • Low 30-year fixed rates

USDA Requirements

  • Up to 100% financing

  • Credit score around 620-640 (?)

  • Property must be in a USDA eligible area, generally a rural location or town of 20,000

  • A steady job and income are generally required

  • Only available for single-family homes that will be used as a primary residence (?)

  • Must fall under the USDA income limits, which applies to the entire household, regardless of who is on the mortgage

  • The homebuyer may not make more than 115% of the area median income

  • A strong DTI ratio

The USDA has its own guidelines and requirements for each borrower, including eligibility requirements for both the property and the borrower. Some lenders may have additional guidelines and requirements.

USDA Loan Refinance

If you have had a USDA loan in the past, you know how beneficial this program can be. With a 0% down payment and lenient eligibility requirements, the USDA loan is very beneficial for those who are low-to-medium income homebuyers.

Our Core Values

  • Honesty, Integrity, and Competence

  • Assist our clients through any roadblock that may arise

  • Help you reach your homebuyer dreams

longmont mortgage company

APPLY NOW!

QUICK QUOTE