USDA Loans

High Level Highlights:

-Exclusively for homes in rural areas (property eligibility can be determined here).

-A down-payment as low as 0%.

-Ability to add many closing costs to the loan amount.

-The maximum DTI (debt-to-income) is 41%.

-The minimum credit score required is 580.

-There is no maximum loan amount, but income and DTI restrictions limit borrowing potential.

-The interest rate is almost always lower than on a Conventional loan.

-Available for primary residences only.

-Minimal monthly mortgage insurance, but required for the life of the loan.

-A one-time fee called the “upfront guarantee fee”, equal to 1% of the loan amount, is required. This fee can be added to the loan amount.

Further Highlights:

​

-There is a household income ceiling of $103,500 for households with four or less people, and $136,600 for households with five to eight people. For larger households, the income limit needs to be calculated.

-An appraisal is required on a purchase, and it is never required on a no cash-out refinance.

-Cash-out refinancing is not available.

-To do a no cash-out refinance, you must already have a USDA loan. This loan can be done without a credit pull, appraisal, or verification of employment/income. The 1% upfront guarantee fee is required again.

-For condos, the USDA requires the condo association be on a list of approved associations from any of the following entities: Fannie Mae, Freddie Mac, FHA, or VA.

-There is a USDA renovation loan that allows borrowers to buy a home and borrow the funds needed to complete renovations on the property after closing. This program is harder to qualify for, requires more documentation, and has higher interest rates than a standard USDA loan.