USDA Guaranteed Mortgage
A USDA loan is a government insured purchase loan that does not require a down payment. These loans are only offered for homes in rural areas under the Guaranteed loan program. An individual or family may borrow up to 100% of the appraised value of the home, eliminating the need for a down payment. USDA loans follow the basic FHA guidelines, however, the loan is processed as a conventional transaction.
- This is a rural housing loan, and a properties specific address must be verified as “eligible” for a USDA loan. Hays County and Bastrop County, for example are fully eligible, but not all of Travis County.
- Visit http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do for eligible rural areas.
- Borrowers may finance 100% of the appraised value to finance closing costs, if the property appraises above the sale price.
- USDA loans require a 3.5% Guarantee fee that can be financed back into the loan.
- There is no monthly mortgage insurance.
- There is no limit the amount a seller can contribute towards closing costs.
- Income limitations exist, based on the number of occupants 18 and older in the household.
- No homes with “in-ground” pools are allowed
- Minimum FICO score for all eligible borrowers is 620
- Debt to income ratio guidelines
- New house payment (principal, interest, property taxes, homeowner’s insurance, mortgage insurance (if applicable) and HOA dues (if applicable) should not exceed 29% of gross monthly income
- New house payment AND monthly debts (including but not limited to minimum credit card payments, auto loans, student loans, child support, other properties financed, etc….) should not exceed 41% of gross monthly income.
