How to Qualify for a USDA Loan

If you are planning to buy a home in a rural area, ask your real estate professional whether or not the area qualifies for USDA Home Loans.  For properties that qualify, you may be able to finance 100 percent of the purchase price of the home on a 30 year fixed interest loan.
Because the USDA loan program does not require a down payment, you can hold onto the money you would have put down on another property outside the USDA loan area. Or, you can use the down payment funds to repair or improve the property.  It’s your call under the terms of a USDA home loan.

How does it work?

USDA home loans are originated by the federal government, but serviced through direct lenders.  The repayment of the loan is guaranteed by the United States Department of Agriculture.  This means you can use any traditional mortgage lender, but the loan must meet the USDA loan guidelines in effect at the time of the mortgage origination.

The application process for a USDA loan is essentially the same as any other loan, but the lender must ensure that you and the property both qualify for the USDA program.  Eligibility of the property itself is determined not by the potential buyer, but by the location of the property.

Will you qualify?

Your ability to get a USDA loan is determined by your financial history. If you are a United States citizen and have a solid credit history (the usual qualifying score is between 620 and 640) and meet the usual income requirements, you can be qualified for USDA loan (presuming the home is located in a rural area covered by USDA loans). A steady job with a reasonable income is generally required for a loan approval.

You cannot qualify for a USDA loan if you have had a bankruptcy in the previous three years.  You won’t need perfect credit, to get financing through USDA, but the more you pay attention to your financial record, the more likely you are to get a USDA loan approved.

If you are first time home buyer or if you simply want to purchase a property that qualifies for a USDA home loan by virtue of its rural location, now is the perfect time to talk to your real estate professional about starting the qualifying process.  USDA home loans offer you the flexibility, stability and economy you need to make your plans for a new home a reality.