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How to Determine if You’re Eligible for a USDA Loan

September 23rd, 2014

How to Determine if You’re Eligible for a USDA Loan

There are several Federally orchestrated programs that are used to help more Americans have the opportunity to become homeowners. One of these programs is the USDA Loan Program. This helps low to moderate income rural homebuyers to qualify for a mortgage and purchase a home. Some of the advantages this type of loan offers to qualified homebuyers include:

  • 100% Financing: No down payment .

  • Flexible Credit Guidelines: Non-traditional credit histories may be acceptable.

  • Home Improvement:  Eligible repairs and improvements may be included in the loan.

  • Help With Closing Costs: Closing costs and fees can be included in the loan or paid by the applicant.

Direct Housing Loans A person’s eligibility for a USDA loan is based on their income level and credit history, and is limited to qualifying properties. Some applicants qualify for lending directly from HCFP (Housing and Community Facilities Program). In order to be eligible for this type of funding, applicants must:
  • Have low or very low income. Low income is between 50-80% of the area median income. Very low income is less than 50% of the area median income.

  • The applicant family must be without adequate housing.

  • The applicant family must be able to afford the mortgage payments, taxes and insurance. Payment subsidy is available to help some applicants meet this requirement.

  • The applicant’s credit must qualify for the loan.

Single Family Housing Guaranteed Loans

For applicants who exceed the income limits for a USDA Direct Housing loan, a single family USDA Housing Guaranteed Loan may be helpful. This is a mortgage granted through a USDA approved lender, and guaranteed by the USDA. Applicant qualifications include:
  • Applicant income of up to 115% of the median area income.

  • The applicant family must be without adequate housing.

  • The applicant must have a reasonable credit history.

  • The applicant family must be able to afford the mortgage payments, taxes, and insurance.

Property Eligibility

USDA loans are not issued for every available property. The purpose of these loans is to help families in rural areas to achieve homeownership, and to encourage improvement of rural areas. Only properties within approved rural areas qualify for the loan. The housing must be modest in size, design, and cost. The cost of the home must not have a market value that exceeds the area loan limit. After approved improvements, the property must meet HUD safety standards. An approved USDA lender such as Axiom Financial can help you to determine if you qualify for this type of loan, and which properties in your area meet the criteria.

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