USDA loans offer 100% financing to qualified buyers, and allow for all closing costs to be either paid for by the seller or financed into the loan. USDA offers some the lowest rates of any loan, and always have a fixed interest rate. A USDA loan is a government-insured home loan that allows you purchase a home with no money down.
USDA Loan Eligibility will be determined by three factors:
1) Credit Worthiness:
When an underwriter reviews your credit history on a USDA loan, the principal thing they will be looking for is a history of paying your bills in a timely fashion. If you have had blemishes in the past, they may be overlooked as long as you have re established your credit over the past 12 months. Generally, any open judgments or collections will need to be paid off before you close on your new home.
2) USDA Loan Income Restrictions:
You will need to be able to document your income on a USDA loan. USDA will generally want to see a two-year history of employment or consistent income. Exceptions on the two-year requirement can be made for applicants such as students. On a USDA loan, assets are not required for approval, but can help overcome any possible blemishes on your credit.
3) Where You Live:
In order to qualify for a USDA loan, your home must be located in a USDA-designated rural area. You can check the USDA eligibility of your county. It might surprise you just how many areas of the United States do qualify for these no-money-down home loans. The goal of the USDA loan program is to help our nation’s small, rural communities thrive by making land and property more affordable.