USDA Home Loan Process

Buying a house is probably one of the largest and most important investments you’ll ever make. Naturally, it involves a lot of headache. The USDA home loans make home buying extremely easy for you by offering you 100% financing.

One of the biggest reasons that deters many individuals from buying a home is that they are not financially strong enough to carry the burden of a hefty down payment. USDA loans frees you from having to make down payment and in some cases, the closing costs can also be included in the loan amount. If you meet the credit and income qualifications, and the house you’ve chosen is in a designated rural area, you can easily qualify for a USDA mortgage. The USDA home loan process is quite similar to the process of getting a traditional home loan from private lenders and banks. Therefore, you need to provide necessary documents and follow certain steps to get a USDA home loan.

How to Apply for a USDA Home Loan Process?

First of all, you will need to go through the prequalification process before the standard USDA home loan process starts. In this process, your file will be reviewed to see if you meet all the eligibility guidelines of the USDA. This is a very important step that can help you in determining the type of house you will be able to buy, thus saving a lot of time. The pre-qualification process includes credit eligibility, income eligibility, and property eligibility guidelines.

To be eligible for the loan, your property must be located in a rural area or a semi-developed area with less than 25,000 people. Your income should be less than the Area Median Income (AMI) by 115%. Finally, your current income and credit score will be reviewed to ensure that you can easily repay your loan.

At this stage, a lot of paperwork will be involved and after that you will receive a pre-approval letter. This letter notifies that you are eligible for a USDA loan. If you haven’t already selected a house for yourself, you can start looking for a home in the USDA designated areas. After that you have to lock the current rate of interest and order a home appraisal.

When the appraisal of your house is done, an inspection for your property will be set up. This is to make sure that your house complies with the standards set by the USDA. If your house does not meet the set standards, the seller will have to fix it before closing. After this is done, you need to prepare your file with all the remaining underwriting items for underwriter’s review. You can include the closing costs of the loan in the loan amount and if you do not want to do that, the program also allows you to take gift funds from others for closing costs. After the USDA loan is underwritten, you will submit it for final approval.

Final Review of the USDA Home Loan Process

After the application process is over, your loan will be reviewed thoroughly. All your financial and credit information are taken into consideration to make certain that you will be able to pay off your monthly loan installments without affecting your household expenses. The whole process of verification takes anywhere, from two days and a maximum of two weeks. Then your loan request will be processed and you will have to submit the necessary documents to get the loan.

To get more details about the USDA home loan process and to apply for it, you can get in touch with us. We’ll walk you through the entire USDA home loan process.