USDA loans are a great resource if you’re looking to purchase a home in what USDA considers a “rural” area. To find out if the property you’re interested in qualifies CLICK HERE. USDA also has income limits; you can find them by CLICKING HERE.
Essentially if the property you’re looking to purchase is in a USDA rural area and you meet the income limits you can purchase the home with nothing down. You will need to pay closing costs which can be up to 3% of the purchase price or increase your interest rate to cover them.
Here are the rest of the details:
-Minimum 620 credit score
-1 unit owner occupied property only
-No manufactured homes
-Upfront guarantee fee of 1%
-Annual guarantee fee of .35%
-100% gift funds allowed
-$417,000 max loan amount
-Mandatory tax and insurance impound account
-Non-occupant co-borrower not allowed
-No Foreclosures or short sales in the past 3 years
-Chapter 7 bankruptcy discharged in the previous 3 years
-Chapter 13 bankruptcy that has yet to complete repayment or has completed payment in the most recent 12 months
-Max 40 acres
An example of a USDA loan payment:
$400,000 purchase price with nothing down
1% upfront funding fee = $4,000
Total loan amount is $404,000
Principal and interest payment at 3.25% = $1758
Monthly mortgage insurance = $118
Monthly property tax payment = $417
Monthly home owners insurance payment = $70
Total monthly payment = $2363
When you’re ready to get pre-approved give us a call!
Michael Regan (NMLS 275695) is a mortgage banker serving Sonoma, Marin, Napa, and San Francisco Counties. You can reach him at 707-508-8473 or 415-672-2499.