Individuals who are dreaming of having their very own home, but may not have the means to purchase it outright or even qualify in conventional mortgage programs can rely on the governments USDA Home Loan. This type of loan is open to individuals in suburban and rural communities. One of its most important features is its zero-down payment scheme. Heres what else you need to know when applying for a USDA Home Loan.
Types of Loanable Property
The US Department of Agriculture Home Loan program is only applicable to properties considered primary residences that are occupied by the owner of the property himself or herself. If the property is occupied by any person other than the registered owner of the primary residence, it may not be applicable for the USDA Home Loan.
To qualify for a home loan by the USDA, you must meet certain requirements on income limits. This varies depending on ones location and the size of your household.
Citizenship or Residency
USDA Home Loans are open to all US citizens including individuals that have been granted permanent residency status by the government. It is wise to have all the documents pertaining to ones citizenship or residency status.
Applicants for a USDA Home Loan should have acceptable credit history without converted collections in the immediate 12 months prior to the application. However, if the credit can be proven to be the result of circumstances beyond ones control, one can still qualify for the loan.
Ideally, one should have a credit score of at least 640. This helps guarantee a more streamlined processing in the USDA Home Loan application. If your credit score is less than 640, you can still apply for the loan. Unfortunately, be prepared for stricter standards in underwriting. Individuals who have limited credit history or those who dont have a credit score can still qualify using non-traditional credit references which can include history of utility and rental payments.
When you apply for a USDA Home Loan, make sure that you have a dependable income for at least 24 months. This is a fundamental requirement that should help the agency feel more confident about your ability to repay the loan.
To qualify, it is imperative that your monthly debt payments dont exceed 41 percent of your monthly income. However, if you have a credit score of at least 680, the debt ratio can be higher.
The USDA Home Loan makes it easy for certain individuals to obtain the home theyve always wanted. Just make sure you have these requirements checked before applying.