You can finance some of the closings costs into your new USDA loan. The program also allows for gift funds from family members or friends.
Copy of driver’s license
Copy of social security card
Two most recent paystubs
Two years W2’s or Tax Returns
Fully executed sales contract
Contact information for insurance agent
What are the documents I will need?
Frequently Asked USDA Purchase Questions:
Your monthly mortgage insurance will be .40% and 2.0% for the funding fee.
What About The USDA Funding Fee?
The USDA funding fee is collected by lenders at closing and is financed into the loan which helps offset the cost to fund the USDA program. There is also monthly mortgage insurance on all USDA home purchases.
Minimum credit score
Geographic eligibility
Income limit maximum
Debt to income ratio cap
Single Family Residence
What Are the Requirements?
100% financing
Credit scores down to 600
What Are the Advantages of A USDA Purchase?
The USDA still offers 100% financing that makes it the one of the most attractive purchase loans still out in the market,. Also due to its overall low cost as well as flexible underwriting process that allows for compensating factors. All USDA loans are run through an automated underwriting system called GUS (Government Underwriting System) in order to get an approval. In the event your file does not get a full approval through the GUS system, it’s possible for your loan to be manually underwritten by a person who can take certain things into consideration. For example a high credit score, low debt to income ratio, or even assets can help offset negative factors on your application. A USDA lender may even consider other types of payment history like rent or utilities when making a decision on an approval. This common sense type of manual underwriting can make the difference when it comes time to get approved for your USDA loan. In addition to this by not having a down payment requirement and being able to finance in your closing costs will save you literally thousands at closing.
Why is a USDA Purchase So Great?
The USDA Rural Development’s Single Family Housing Guaranteed Loan Program is designed to help borrowers purchase homes in rural areas. USDA home purchase loans are an excellent benefit for first time home buyers as well as growing families looking to obtain the American dream of home ownership. Borrowers that qualify can purchase a home with no money down, which makes buying a home extremely affordable. In addition, USDA purchase loans also offer very flexible underwriting guidelines, the ability to finance in closing costs and a competitive a 30 year fixed rate option.
What kind of loan can I get?
How do I pay for the upfront funding fee?
The funding fee of 2% can be financed into the new loan if you choose.
Currently the USDA only offers a 30 year fixed mortgage.
Is it possible for the seller to pay my closing costs?
Yes, as long as you negotiate the sales contract to include a seller contribution the USDA program allows for certain costs to be paid by the seller at closing.
I’m not a first time buyer. Can I still get a USDA loan?
Yes, it’s not a requirement to be a first time buyer.
What if I’m not sure if I’m eligible for the USDA program?
Ask your lender to verify all the qualifying factors for you. By simply applying for a USDA home purchase the lender can determine if you qualify or not.
Can I purchase a working farm?
Currently the USDA program is only allowed for primary residential property.
Will I have to get an appraisal?
Yes, an appraisal will be required for your new USDA home purchase completed by an independent appraiser.
What if I can’t afford the closing costs?