USDA is referred to as a rural loan, however, there are many areas with dense population that qualify. The loan assists in providing low & moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible areas.
Features include 100% Financing; reduced mortgage insurance; flexible qualifying credit; and competitive rates.
Home must be in a qualifying area. (Lookup Property Eligibility)
Income qualification varies per county. (Income Lookup)
Atlanta Metro, Georgia (example)
1-4 person's in household, $86,050
5+ person's in household, $113,600
Funding fee required.
Credit 640+ required.
Primary residence only.
Non-occupant co-borrowers are not allowed.
Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien.
Have the legal capacity to incur the loan obligation.
Have not been suspended or debarred from participation in federal programs.
Demonstrate the willingness to meet credit obligations in a timely manner.
Home Buyer Class is Required.
Cannot own another home in the area, (exceptions exist see below).
One borrower must have at least two historical trade line references that have existed for a minimum of 12 months.
Owns a Dwelling
An applicant who owns a dwelling to which they will retain ownership is eligible for a guaranteed loan to purchase another home if all of the criteria below are met:
The current dwelling is not financed by a Rural Development guaranteed or direct Section 502 or 504 loan or active grant (the grant agreement has not expired);
The homeowner is financially qualified to own more than one house (the loan applicant is limited to owning one single family housing unit other than the one associated with the loan request);
The homeowner will occupy the home financed with the guaranteed loan as their primary residence throughout the term of the loan.
The current home owned no longer adequately meets the applicants’ need. Manufactured housing units that are not fixed on a permanent foundation are considered functionally inadequate. The determination that the current home no longer adequately meets the applicant’s needs must include documentation of a significant status change in the circumstances of the borrower that require immediate remedy. Examples of changes in status could include, but are not limited to:
Severe overcrowding which is defined as more than 1.5 household residents per room. The room count generally includes a living room, dining room, kitchen, den, recreation room, and bedroom(s). Room counts do not include the bathroom or an entry hall/foyer. We must obtain verification that overcrowding has existed for more than 90 days and will persist for at least nine (9) months into the future.
The disability or limited mobility of a permanent household resident that cannot be accommodated without substantial retrofitting of the current property, e.g., the installation of a ramp, an elevator or stairlift, or extra-wide doors and hallways. Lender must obtain verification of the change in status, the existing property deficiencies, and the suitability of the new property.
The applicant is/has relocated with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance.
In all cases, we (the lender) must provide explanation of the burden upon the applicant imposed by the status change both in the near and longer term, and also the reasons beyond homeowner convenience why the purchase of the property must be completed prior to the sale of the existing property. All documentation will be retained in the lender’s permanent loan file and may be requested by the Agency upon review.
Guidelines change frequently, therefore, we do not guarantee accuracy. Above is provided as a reference, to be confirmed with our team. Subject to change without notice.