Home Loan Services
USDA Home Loans
USDA Program Highlights
The USDA Home Loan is one of the most popular home loans today. Some say the benefits of this home loan are almost too good to be true, but they are!
100% Financing- No Down Payment
- Low Mortgage Insurance Rates
- Low Interest Rates
- Flexible Credit Guidelines
- Qualify Down to a 620 Credit Score
- Finance in Cost for Repairs/Upgrades
- Fixed Rates
- 30 Year Amortizations
USDA Home Loan Flexible Credit Guidelines
A great benefit of the USDA Home Loan is you don’t need perfect credit. A borrower’s credit may have blemishes from collections or previous late payments. For others, it may be a complete lack of credit or no active credit accounts. Nonetheless, these issues can usually be overcome.
For those who have limited credit, alternative credit may be used. Alternative credit are accounts, such as; electricity, rental history, cable bill, phone bill, auto insurance, renter’s insurance, etc. These types of accounts may be used to supplement traditional credit accounts such as auto loans and credit cards.
Contact us to speak to a USDA Home Loan Specialist if you need help understanding your credit situation and what type of documentation you may need.
USDA Home Loan Limits
With a USDA Home loan , you have the option to finance in the cost of repairs and some appliances. This is only a possibility if the house appraises for more than the sales price. The sales price plus the cost of repairs/upgrades cannot exceed the appraised value. For example, if sales price is 100k and 2k for appliances, the home must appraise for at least 102k or more.
Home Repairs
This program allows the repairs to be financed into your loan and taken care of post closing by a professional contractor. Unfortunately, you are not able to complete these repairs yourself. These are usually minor repairs that must be noted by the appraiser in the appraisal report. The repairs can consist of minor items, such as; replacing carpet, painting, fixing broken windows, fixing non-working toilets, etc.
You will need to obtain an actual bid from a professional contractor to show the estimated cost to fix the repair items the appraiser is requiring for the property to meet minimum guidelines. The bid needs to have your name, list items to be fixed, cost of items, on contractor letterhead, contractor name and mailing address.
The cost shown in the contractor’s bid will be financed into the loan and held in escrow. The contractor will receive 50% of their estimated bid at closing and the remaining amount after the work is completed. To determine the work has been completed, we will send the appraiser back out to the property to complete a final inspection and take photos . Upon our receipt of the final inspection, the contractor is released the rest of their funds by regular mail.
Home Upgrades
The only allowed upgrades are for the following appliances: refrigerator, stove/range, microwave, and dishwasher. You will need to obtain a quote from the store you wish to purchase the appliances from. The quote must have your name, the subject property address, list items being purchased, cost for items, and reflect company name.
The amount shown on the quote will be financed into the loan amount. You will receive a check at closing made payable to the appliance store. You can take the check into the store and purchase your appliances. Once the appliances are delivered, you will need to obtain a copy of the delivery confirmation showing the appliances have been delivered to the subject property address.
Finally, you will submit a copy of the paid receipt and delivery confirmation to us to complete the requirements for the loan.
Home Loan Comparison
| Home Loan Comparison | USDA-640 | USDA-620 | FHA-640 | FHA-580 | FHA-500 | VA | CONV. | CONV. | CONV. |
|---|---|---|---|---|---|---|---|---|---|
| Loan Parameters: | |||||||||
| Credit Score | 640 and up | 620-639 | 640 and up | 580 -639 | 500 – 579 | 620 and up | 680 and up | 620-679 | 600-619 |
| 30 Year Loan Term |  | | | | | | | | |
| 15 Year Loan Term |  | | | | | | | | |
| Minimum Down Payment Requirement | ZERO | ZERO | 3.50% | 3.50% | 10% | ZERO | 3%+ | 5%+ | 20%+ |
| Upfront Insurance/Guarantee Fee/Funding Fee | 2% | 2% | 1.75% | 1.75% | 1.75% | 2.150% | NONE | NONE | NONE |
| Mortgage Insurance Rate* | 0.40% | 0.40% | 1.25% | 1.25% | 1.15% | | 1.15%+ | 1.25%+ | NONE |
| Non-Occupant Co-signer allowed | | | | | | | | | |
| Minimum Loan Amount | 50k | 50k | 50K | 50k | 50k | 50k | 50k | 50k | 50k |
| Maximum Debt Ratio | 50% | 41% | 55% | 50% | 43% | 50% | 45% | 45% | 45% |
| Maximum Seller Concessions | 6% | 6% | 6% | 6% | 6% | 6% | 3% | 3% | 6% |
| Annual Household Income Cap | | | | | | | | | |
| Loan Amount Cap | | | | | | | | | |
| Property Location Limited to Certain Areas | | | | | | | | | |
| Note: Mortgage insurance rates on conventional loan programs are based upon credit scores whereas with the government loan programs the mortgage insurance is the same for every borrower and does not discriminate against a borrower’s credit score. Actual mortgage insurance rates may vary upon underwriting approval for non-government loan programs. Mortgage insurance is not required on VA Home Loans or Conventional Home Loans with 20% or larger down payments. | |||||||||
WE ARE NOT A MORTGAGE BANK – WE DO NOT PROVIDE MORTGAGE ASSISTANCE – WE ARE AN INFORMATION SOURCE FOR HOME LOANS