What is a USDA Home Loan?
The USDA (United States Department of Agriculture) home loan, also called Rural Housing Loan, is designed to help development and growth in rural areas. It is a 30-year fixed-rate mortgage with 100% financing available and a 0% down payment. It is a great loan program that helps many families become first time home buyers. In order to take advantage of this specialized loan, there are several requirements that must be met.
Requirement #1 USDA Eligible Areas
Not all locations are eligible for the USDA Home Loan. So, the first step you want to take is to make sure the area you are searching for or a property you are interested in falls within an eligible area. Your REALTOR and/or Mortgage loan officer can assist with confirming if a location is qualified. If you do have a specific address then you can check its eligibility on the USDA’s website.
Requirement #2 Income Limits
The USDA Home Loan is geared towards borrowers who do not have high incomes. If your household exceeds the maximum income limit, you may not qualify. Each county in Texas varies so you will want to confirm what the maximum income limit is in the areas you are looking in. Here you can find the 2020 USDA income limits.
All the following types of income count toward your total household income:
- Bonus Income & Commission
- Social Security Income
- Rental Income
- Trust Income
- Military Income
- Alimony, Child Support, and Separate Maintenance
Requirement # 3 Loan Limits
Just like the other requirements the USDA home loans have restrictions. There is a maximum amount that can be borrowed and every county in Texas is different. Here are the 2020 USDA loan limits. The house you want to purchase can be more than the loan amount but that means you would have to put money towards a down payment.
Some home loans only require a 580 credit score, like an FHA loan. However, the USDA Home loan minimum credit score is 620. The higher credit score requirement lowers the risk of a borrower defaulting on the loan and better protects the lender.
Requirements #5 Details About the Property
Here are some additional details for a property to be qualified for a USDA Home Loan:
- The property must be in an eligible area
- The property must be occupied by the owner, not investment or rental property
- Condo units are eligible
- Property cannot be income-providing or a farm
Find out if you qualify for our USDA Zero Down Rural Housing Program today! Our REALTORS can also help you find properties that meet the above requirements to take advantage of all the benefits a USDA Home Loan has to offer.