What factors determine if I am eligible for a USDA loan?

To meet USDA loan qualifications, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit profile and background will be considered. A FICO credit score of 620 or above is usually required for USDA approval through most lenders. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios may be exceeded to a certain amount if the borrower has compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. Maximum USDA Guaranteed Loan income limits for your area can be found here. Maximum USDA Direct Loan income limits for your area can be found at here. Direct Loan applicants must prove their family is without adequate housing, and also prove their ability to afford the new mortgage payments.

How much can I can borrow with a USDA loan?

When asking yourself the question “how much mortgage can I afford with a USDA loan”, there are several factors that will give you the answer.  The maximum amount for an USDA home loan is determined by:

Maximum loan: The is not a maximum loan amount set for USDA Home Loans. Instead, a borrowers debt-to-income ratios will determine how much they can afford (29/41 ratios). In addition to the debt ratios, the borrowers monthly household income must be smaller than the USDA allowed maximum income limit for your the area of the home. Maximum Guaranteed Loan family income limits for the entire country can be found at here.

Maximum financing: The maximum USDA Rural Loan amount will be 102% of the appraised value of the home (100% plus the 2% USDA loan guarantee fee).

What is needed for down payment and closing costs?

USDA mortgage loans don’t require any money for a down payment and they also allow the borrower to place the closing costs into the total loan amount (if the home appraisal permits).

What property types are allowed for USDA mortgage loans?

While USDA mortgage guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.

How long do I have to wait after bankruptcy to apply?

Criteria for USDA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for three years or more, you are eligible to apply for an USDA mortgage. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make a USDA Loan application.