USDA Loan

• Conform to HUD (Housing and Urban Development) guidelines in conjunction with the United States Department of Agriculture with regard to determining credit worthiness of lending.
• Qualifying FICO credit scores can vary depending on the lender, but are similar to FHA that they can be lower than average, typically 600-620 is the cutoff but below 600 is possible with compensating factors.
• Rates of interest tend to be on par with FHA but can sometimes be lower because they are government insured and only available to a select population and select properties.
• Unlike the other mortgage types mentioned USDA does impose a maximum income limit for households applying for home loans. This limit is determined based on the average median income for the area the home resides in and accounts for income from all individuals living in the household.
• Along with income, there are also geographic restrictions that limit USDA financing for homes that reside in eligible areas.
• Like FHA & VA these loans are meant to be for the purposes of purchasing a primary residence, although you cannot have more than one USDA insured home loan in your name.
• USDA loans are meant for the purposes of acquiring and reducing the payments on your home loans, you cannot draw equity from the property with a USDA loan.
• USDA has a “streamline loan” like FHA and VA; this would be the only other use of a USDA loan besides the initial acquisition of the home.
• Upfront and monthly mortgage insurance are applicable, but they are lower than FHA and VA with the exception of monthly mortgage insurance on VA loans since they have none.
• More stringent debt to income calculations than FHA and VA but can be flexible depending on any compensating factors.
• As with VA loans, USDA has the highest loan to value for consumer residential mortgage at 100% of the property’s value. Any upfront mortgage insurance is financed on top of the base loan amount just like VA (over the 100%).

Learn more about USDA loan programs here:  https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do