Georgia Mortgage Blog

If you would have asked me 10 years ago if I could do a USDA loan for you to purchase the home you were viewing, I would have asked you if you were planning on raising cattle. Like a lot of loan officers at that time I would have encourage you to use the FHA program instead along with gift funds for the down payment. The fact is both are great loan programs for first time home buyers with little to no resources, but the desire to own their own home. USDA loans are growing in popularity today and are being used to purchase homes not only in country settings, but also in neighborhood and surburban areas that qualify.

The USDA program is truly a Rural Housing Development loan program designed to help low to moderate income buyers purchase homes in "rural" termed areas. The biggest questions that arise is what makes an area rural. It does not necessarily mean a home must be located off of a dirt road in the middle of the wilderness. Rural locations are determined by population density. This brings a new understanding to the idea behind the homes that may or may not qualify. USDA makes it very easy to check on home qualifications by making the information public on their home page for anyone to view. You can simply follow this link http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do and follow the instructions to check on individual property eligibility or even view large area maps that display the outlined limits for approved areas.

Another aspect of USDA loans are the income limitations that are set forth for the program. Unlike other loan programs, buyers cannot make too much money. This is a concept that most people find mind boggling, but this program was designed to help low to moderate income individuals. This is clearly the case when you consider USDA offers 100% financing, no monthly mortgage insurance, requires no reserves, and offers competitive markets rates on 30 year fixed loans. The income limitations vary by the market area and are based on the size of the family members who will be living in the home. Tax returns must always be provided when applying for these loans and the income limitations are strictly enforced. Working with a loan officer who understands these guidelines is extremely important. It is often easy to make a mistake on qualifying income and end up with a loan file that must be restructured. The USDA website also offers an easy income qualification option.

The USDA program is a unique finance option for individual buyers to be aware of. With the flexibility of the 100% financing coupled with it being a friendly first time home buyer loan, it will surely grow to become one of the most used loan products of the future. But remember, working with an experienced mortgage professional is key to a smooth and productive experience.

If you would like any more information about these types of loans, please check USDALoans or ContactUs.

This article was brought to you by the Tallman/Bland Mortgage Team at Mortgage Solutions of Georgia, LLC.