The United States Department of Agriculture offers a mortgage loan program to home buyers in rural and suburban areas – with no down payment required! There are several different loan options available: the USDA Guaranteed Housing Loan, the USDA Direct Housing Loan (for low and very low-income home buyers), and also loans that can be used for home improvements or repairs.
Qualifying for a USDA Loan
In order to qualify for either a USDA Guaranteed Housing or Direct Housing loan, there are certain requirements you must meet. While the exact criteria may vary from person to person based on location, income, household size, or other factors, here we will give you a basic overview of the eligibility criteria for USDA loans.
A qualified mortgage specialist will help you sort out the details applicable to your specific circumstances.
First, all applicants must be either US citizens or permanent residents, and be taking out the loan on an owner-occupied primary residence. They also ask for applicants to show proof of regular, stable income for a minimum of 24 months, as well as have a satisfactory credit history.
While the minimum credit requirements may differ, those with higher scores are likely to get a more streamlined process, while those with credit scores below 580 may have to face underwriting standards that are much more rigorous.
It’s important to note that there are certain geographical locations that do not fall within the eligibility criteria, primarily metropolitan areas. This housing loan program is designed to support home purchases in rural areas, though individuals purchasing in the suburbs of metropolitan areas may also find themselves in an eligible area for a USDA Loan.
USDA Guaranteed Housing Loan
The USDA Guaranteed Housing Loan is geared toward moderate- or average-income households. Depending on the median income of the area in which the applicant resides, they can have an income up to 115% of that value and still qualify.
The credit score requirements vary and depend on both the USDA and the lender’s preferred criteria.
USDA Direct Housing Loan
The USDA Direct Housing Loan is designed for lower-income families. In this instance, “low income” is considered to be between 50-80% of the median area income, and “very low income” families are households that earn below 50% of the area median income. Both of these classifications may qualify for a USDA Direct Housing Loan.
If you’re wondering whether a USDA loan can help you get into your very own home, then we at TILA Mortgage can help. We specialize in home loan financing in Seattle, Bellevue, Everett, and other regions throughout Washington State. Call (206) 766-8888 to get a free rate quote today!