USDA Loans

USDA loans, most of us have heard of them, but are not sure what they are all about. The USDA loan is a great option for those that do qualify.  Here are some basics:

1. 100% financing (with a Guarantee fee of 2% AND a .30 monthly MI fee)
2. Has to be a RESIDENTIAL property in a USDA deemed rural area; cannot be for the purchase of a farm
3. Available to low and moderate income borrowers
4. USDA income is based on the number of persons that will be living in the home
5. Income thresholds change based on 1-4, 5-8 and 8+ household sizes
6. As a general rule, properties with acreage in excess of 5 acres will be deemed excessive and ineligible
7. If any of the land is planted, the property is ineligible
8. Any outbuildings related to farming, the property will be ineligible
9. USDA loans are underwritten by the lender and then secondarily underwritten by the state USDA office

For more detailed information, please visit the USDA website: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?NavKey=home@1.

If you are considering purchasing property in a rural area, it may be worth your time to check it out. I know in the Dayton, OH area, there are quite a few areas that qualify, some areas will suprise you.  Some areas of Springboro and Waynesville qualify along with Trotwood, Xenia and possibly Bellbrook.

If you are a first time homebuyer that feels strapped to put down the 3.5%, why not check out this option? It may be in your best interest to move out a little further to get a 100% financed home loan.

Check with your bank to see if they work with these loans.  Good luck!