Stewart Brown Jr – Mortgage Loan Originator – Purchase or Refinance
| A USDA loan is a loan that is insured by the United States Department of Agriculture. These loans are only permitted on properties that lie in rural areas with populations of 35,000 or less. You can find out if an address falls into this category by visiting eligibility.sc.egov.usda.gov/eligibility. USDA loans offer an affordable 30 year only term with no money down, so 100% financing is available. This government guaranteed loan helps by providing low and moderate income households the opportunity to own a home in eligible rural areas. There are basically two types: Section 502 Guaranteed loan through an approved lender and a Section 502 Direct loan from the USDA. The option directly from the USDA is only available to low and very low income applicants. These programs are also not limited to first time home buyers. |
| A USDA loan is a loan that is insured by the United States Department of Agriculture. These loans are only permitted on properties that lie in rural areas with populations of 35,000 or less. You can find out if an address falls into this category by visiting eligibility.sc.egov.usda.gov/eligibility. USDA loans offer an affordable 30 year only term with no money down, so 100% financing is available. This government guaranteed loan helps by providing low and moderate income households the opportunity to own a home in eligible rural areas. There are basically two types: Section 502 Guaranteed loan through an approved lender and a Section 502 Direct loan from the USDA. The option directly from the USDA is only available to low and very low income applicants. These programs are also not limited to first time home buyers. I’m Stewart Brown, a licensed Mortgage Loan Originator in Palm Springs, California here to simply topics in Real Estate and Mortgage Lending. Please, like, share, follow and subscribe! |
| To qualify for a USDA loan there are certain eligibility requirements. First you must be a US citizen, US non-citizen national or a qualified alien. You must also personally occupy the dwelling as your primary residence. The residence must also qualify using the USDA’s eligibility site which can be found at eligibility.sc.egov.usda.gov/eligibility. If applying for the guaranteed loan through a lender your income cannot exceed 115% of the area median income. While there is no minimum credit score requirement, if your score lies below 640 a manual underwrite would be required. If applying directly to the USDA your income must lie between 50 – 80% of the area median income. In addition, you must not be able to qualify for conventional financing with no private mortgage insurance. Therefore, your bank account statements must show that you have less than a 20% down payment. |
| To qualify for a USDA loan there are certain eligibility requirements. First you must be a US citizen, US non-citizen national or a qualified alien. You must also personally occupy the dwelling as your primary residence. The residence must also qualify using the USDA’s eligibility site which can be found at eligibility.sc.egov.usda.gov/eligibility. If applying for the guaranteed loan through a lender your income cannot exceed 115% of the area median income. While there is no minimum credit score requirement, if your score lies below 640 a manual underwrite would be required. If applying directly to the USDA your income must lie between 50 – 80% of the area median income. In addition, you must not be able to qualify for conventional financing with no private mortgage insurance. Therefore, your bank account statements must show that you have less than a 20% down payment. I’m Stewart Brown, a licensed Mortgage Loan Originator in Palm Springs, California here to simply topics in Real Estate and Mortgage Lending. Please, like, share, follow and subscribe! |
| Similar to private mortgage insurance, PMI, on conventional loan , MIP or mortgage insurance premium on an FHA loan, or a funding fee on VA loan, a USDA loan has a type of insurance called a guarantee fee. This is a 1% upfront guarantee fee based on the loan amount and this fee can be rolled into the loan. In addition, there is a .35% annual fee that is based on the remaining principal balance. This amount is then divided by 12 and this will be included with your principal and interest payment each month. These fees apply whether you are purchasing or refinancing a home. This fee is charged to protect the mortgage lender against losses if the borrower fails to pay. |
| Similar to private mortgage insurance, PMI, on conventional loan , MIP or mortgage insurance premium on an FHA loan, or a funding fee on VA loan, a USDA loan has a type of insurance called a guarantee fee. This is a 1% upfront guarantee fee based on the loan amount and this fee can be rolled into the loan. In addition, there is a .35% annual fee that is based on the remaining principal balance. This amount is then divided by 12 and this will be included with your principal and interest payment each month. These fees apply whether you are purchasing or refinancing a home. This fee is charged to protect the mortgage lender against losses if the borrower fails to pay. |
| The standard debt to income ratios for a USDA loan are 29% front end and 41% back end of the gross monthly income. The maximum DTI on a USDA loan is 34% front end / 46% back end of your gross monthly income. Your lender will use the USDA’s automated underwriting system also known as GUS or guaranteed underwriting system to process your loan request. If your loan is rejected by GUS you can request your lender to do a manual underwrite. USDA will allow these higher DTI ratios with compensating factors. Also, USDA allows single family residences, PUDs, condos, modular homes, manufactured homes and new construction. Properties must also be less than 2,000 square feet and cannot have an in ground swimming pool. No second homes or investment properties are allowed. |
| The standard debt to income ratios for a USDA loan are 29% front end and 41% back end of the gross monthly income. The maximum DTI on a USDA loan is 34% front end / 46% back end of your gross monthly income. Your lender will use the USDA’s automated underwriting system also known as GUS or guaranteed underwriting system to process your loan request. If your loan is rejected by GUS you can request your lender to do a manual underwrite. USDA will allow these higher DTI ratios with compensating factors. Also, USDA allows single family residences, PUDs, condos, modular homes, manufactured homes and new construction. Properties must also be less than 2,000 square feet and cannot have an in ground swimming pool. No second homes or investment properties are allowed. I’m Stewart Brown, a licensed Mortgage Loan Originator in Palm Springs, California here to simply topics in Real Estate and Mortgage Lending. Please, like, share, follow and subscribe! |
When you’re researching current USDA mortgage rates, you’ll likely see variations from one lender to another. Interest rates differ because lenders price their loans differently. It’s helpful to have an idea of average rates over time to help understand USDA loan interest rates. The historical rates below are national averages provided by a third party company.
Reach out to me for further detailed information on USDA loan programs.