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Everything you need to know about a USDA Home Loan

USDA Loans AKA the No Money Down Home Loan

Most people think about farmlands or pasture when they hear about a loan backed by the U.S Department of Agriculture.  That’s understandable since when most people hear USDA they think of Organic farms, chickens and harvests but there’s a lot more to the USDA then meets the eye.  They are one of the only Loan Programs besides a VA loan that does not require a down payment.  If that get’s you excited enough to start the process now Click here for a free consultation.  But for a more in depth look at USDA loans in Plattsburgh, Malone, Canton, Syracuse, Buffalo, Saratoga, Albany, Long Island and other area’s in New York(and the whole country) read on.

97% of our Great Nations land mass can be purchased with a USDA Loan.
You read that right, only 3% of the whole country’s land is ineligible for a USDA Loan, All of that ineligible land is located in Populated City Centers, but the good news is a lot of suburban area’s outside of the big cities are eligible for a USDA Home Loan.  For example in Plattsburgh NY the City of Plattsburgh is off limits but the town of Plattsburgh and many surrounding area’s such as Cadyville, Saranac, Dannemora, Peru, even Cumberland Head and surrounding area’s are good to go USDA.

For a better understanding of the property Eligibility in the Plattsburgh housing market check out the image below. The shaded red area is not USDA eligible.
Plattsburgh NY USDA Area Eligibility

Plattsburgh NY Property Eligibility (Anywhere outside of the red shading is Eligible)

If your not looking in the North Country Use this Property Eligibility Map to see the eligible area’s from Sea to Shining Sea, you can search by Address or just zoom in on area’s you are thinking about purchasing in.  Ill show another example below Of USDA Eligibility in the Saratoga Springs, NY area.
Saratoga Springs USDA Eligibility

 

Saratoga Springs Property Eligibility (Anywhere outside of the red shading is Eligible)

Long Island USDA Property Eligibility

Long Island Property Eligibility. (Anywhere outside of the Red shading is USDA eligible)

Colorado USDA Property Eligibility

Anywhere outside of the Red Shading is USDA eligible

Don’t lose faith if you are looking to move into a more populated area, We also have many other low down payment home loan options.  For example you could use a FHA Loan anywhere in the country, Even a duplex, triplex and 4-plex are eligible for 3.5% down.  Another great feature of low down payment loan options Is you can use a gift of funds from a family member for down payment, so it could also technically be a no money down home loan for you! For example your father or mother could gift you the entire 3.5% down on a FHA home loan .

USDA Home Loans Income Eligibility
Unlike most loan program’s their is no limit to your loan amount, the limit for USDA Loans come from an Income Limit.  The income limit for a USDA is calculated county by county using the median income of that county.  The median income of that county is grossed up 15% and that is how you get your income limits.  In simpler terms for a Family of 1-4 adult’s purchasing in Clinton County the Limit is $78,200.00  For a family of 5-8 members that limit is $103,200.00  The limit is the same in Essex, Franklin and St. Lawrence County. If your interested in another part of the country  you can check the limits online or give us a call and we can do the legwork for you.  You can also use this Handy income eligibility calculator provided by the USDA.   Of course the easiest way to know if your eligible is to give us a call and save yourself the headache, (518)324-5544.  If you currently make over the income limit their is still a way to get into a home with No Money Down, Expenses such as childcare, unreimbursed business expenses and a few other deductions can help lower your income to meet eligibility.

Credit Requirements
Credit requirements on a USDA Home Loan are a bit more stringent than FHA loans, The Minimum Credit Score Required is a 620 for a USDA Home Loan.  They also require no new collections with in the last 12 months (besides Medical in most cases), no recent delinquencies on credit, and an overall good standing with the Credit bureau’s.   If you can prove that your credit was affected by circumstances that were temporary or outside of your control, including a medical emergency, you may still qualify.  You can also not have a bankruptcy in the past 2 years. If you are credit challenged don’t hesitate to Schedule a free consultation. Our experts can help guide you to increasing your credit score in as little as 2 months.

Funding Fee and PMI
Almost all loan program’s that do not require 20% down require a funding fee and PMI or Private Mortgage Insurance.  The good part about USDA’s Funding Fee is it can be financed into your loan.  As of 11-30-17 the USDA’s one time upfront funding fee is 1% of the loan amount.  So if your Loan is for $100,000 your total loan amount would be $101,000 to incorporate the funding fee.  Their is also an “Annual fee” which is sometimes referred to as PMI.  The annual fee is .35% of your remaining loan balance.  This annual fee is spread out over your 12 monthly mortgage payments, so for a $100,000 USDA Home Loan your PMI or Annual fee would be $350, which divided over 12 months comes out to just under $30 a month.  Not a bad price to pay for 100% financing on your very own American Dream.

I hope you enjoyed this article, but don’t get caught in the trap of trying to over analyze your own personal file.  We have a team of experts who is here to guide you through your home buying journey so don’t hesitate to give us a call (518)-324-5544, send us a message on our Facebook, or if your ready to get the ball rolling utilize our safe and secure Online Application.

Thank you for taking the time to read this article,

Matthew Craig