USDA Loan Questions and Answers
Trying to find the most suitable answers to your queries! Herein, we have compiled a list of the most common yet critical questions that comes to the mind of individuals willing to apply for the USDA loans. In case, you wish to find some additional answers to your queries, feel free to get in touch with us, anytime.
Can I get a USDA loan if I already own a home?
Under the USDA loan, borrowers can only qualify if they are willing to buy a primary house for occupancy, post purchase. In case, one owns a house and wishes to buy another one, they need to first sell the existing property to be eligible for this loan scheme. In case, you need any help or assistance in this regard, we are just a call away.
Are USDA loans assumable?
The answer is “Yes.” USDA loans are entirely assumable but with the exclusive qualifying guidelines to be met. An individual needs to meets the standard guidelines to be able to assume the loan, as a borrower, such as- income eligibility, being a primary home intender, etc.
How much are USDA closing costs?
Every associated closing costs for a USDA loan varies depending upon the loan size, and many other specifications, levied on a particular loan. As a loan advisory and assistance body, we offer “Good Faith Estimate” to represent the quite accurately estimated loan fees with your USDA loan.
How much is the USDA guarantee fee / mortgage insurance?
As per the Federal USDA loans, an upfront cost (guarantee fee) of 1.00%, along with 0.40% of the loan balance calculated amount is levied on annual basis. This is further divided into 12 monthly EMIs which reduces every year as the pay offs of the loan balance is cleared. Do not forget to use our USDA loan calculator to get an estimate of your mortgage insurance cost for your loan.
How much is the down payment on a USDA loan?
As such, no down payment is required on a USDA loan, however, one can opt for a down payment if they wish to. For individuals willing to pay a 3% down payment, our experts can help them identify the best suitable loan program option for them, out of the FHA or conventional loans.
How to check USDA loan status?
Any loan facility availed through us is open for status updates by calling at our helpline number- 1-866-361-3406. Our loan representative or loan processor will share the status along with the estimated closing date of your USDA loan.
How long for a USDA loan approval?
A standard USDA loan application gets approved or denied within 24 hours of its application. However, in case of any complexities or issues, an additional approval from the senior underwriter will be needed after a review of the application, which would take longer duration ranging from 48-72 hours.
Can USDA loans be used for land?
Yes, a USDA rural development loan can be used for funding the purchase of a land, but only in case if this land will be further used for a new home construction. Buying an agricultural or farming land through USDA loan is not validated.
Can USDA loans be used to purchase a foreclosure property?
USDA loans does not possess any restrictions sustaining to purchase of a foreclosure property however, the property should be in ready to move stage plus it should be a good shape. Any residential property within the eligible geographic zone whether foreclosed upon or not is eligible for purchase through USDA loans. One can also check the property status on the HUD website to beforehand verify its eligibility for USDA home financing.
Can USDA loans be used for manufactured homes?
Even though there are lending partners who offer USDA mortgages for manufactured homes, but we do not offer any such loan programs for such property types.
Do USDA loans require inspections?
The only inspection required for a USDA loan is the appraisal itself. Under this inspection, all the details of the property are validated, including- the condition of the property, its value, etc. There are a few other inspections that can be optionally performed, too.
Do USDA loans include new construction?
Yes, USDA loans do include new construction. However, the associated loan process is tricky. We do not offer construction loan assistance of any type. For such loans, the borrower needs to get in touch with any other local or national USDA lender.
Do USDA loans cover mobile homes?
Yes, USDA loans cover mobile homes, too but, at this point of time, we do not offer mobile home financing under USDA loans or any type of mortgage program. You can get in touch with any other lender in case you wish to opt for USDA loan for buying a mobile home.
Can you have a co-signer on a USDA loan?
Yes, you can have co-signers on a USDA loan. However, the income of the co-signing applicant must not exceed the total income allowed per household for the county in which the borrower falls. The best benefit of USDA loans is that the borrower can have a non-occupant co-borrower /co-signer on the loan. Most of the conventional loan programs do not allow this facility however, USDA loans permit a non-occupant co-signer.
How much can I borrow with a USDA loan?
The maximum loan amount a borrower can borrow under the USDA loan is based on their income. This amount is potentially based on the total earnings of the borrower versus the amount one must pay in loan, which means the ratio of your debt versus income (debt-to-income ratio).
To determine the exact estimate of how much one can personally borrow as a borrower (after verifying eligibility), a borrower needs to calculate their overall total of their monthly household income, monthly debts, and then compare the percentage of their monthly income in comparison to their debts. No need to include the rent, however, the monthly pay-outs including- student loans, auto loans, credit cards, etc. needs to be included in your credit report.
The maximum percentage of one’s income that one can mortgage payment for can be 29%. For example, for a $4,000 household income, the maximum permitted amount of mortgage payment is $1,160. Herein, the most crucial part of this is the “backend ratio” which refers to the ratio between one’s total monthly debts, in addition to the mortgage payment. The highest permitted backend ratio is $41%. Thus, one’s monthly debts and new mortgage payment in total should not exceed 41% of their income. For example, if you earn $4,000/month, this will equal to $1,640/month.
The maximum loan size that can be potentially borrowed and most lenders are capped at in a county of USA is $647,200.