USDA Mortgages

Yes, the United States Department of Agriculture.  You read that right.  There are USDA loan programs for residential property owners.  Like any other mortgage option, there are advantages and disadvantages.  Let’s explore that with this blog!

USDA Advantages

If are are tight on funds, the USDA requires 0% down.  This allows you to put more money towards closing costs, escrow and any update you might do to your home.  There are looser debt-to-income requirements also.

USDA Disadvantages

This is a government program therefore expect more paperwork.  Similar to FHA products, the property needs to meet certain quality requirements.  This means the appraiser may ask for a roof to be updated or a driveway to be paved or something has to be painted prior to closing.  Re-inspection fees can add up in these scenarios.

There are income limitations too.  The household in general can only make so much money.  This means everyone in the household has their income considered.  They may not be on the loan but they are counted in the total limit.  This is because the intent of this product is for low to medium income households.

In general, this loan is applicable to homes in certain markets.  If you are in an urban setting, you’re probably not eligible.  There is a map to see if you are in the geographic limits or not.  If you’re in a rural community, you’re more than likely going to be in the appropriate market.

Finally, this is a government loan with plenty of risk for the lender.  This means there are additional fees.  The USDA calls these Guaranty Fees.  Similar to FHA, there is a monthly premium and an upfront expense.  The upfront expense is rolled into the loan amount while the monthly payment lasts the life of the loan.

Every situation is different.  We’d be thrilled to have a conversation to see if a USDA product makes sense for you and your needs.  Fill out an application or call me at 734-536-7722 to get started.

 

Jeremiah Claramunt
NMLS 33184