Want to settle down in California? No problem. Buying a new home in California is easier than you think with USDA loans supported by the Agriculture Department of U.S. You can buy a home in California at zero money down and 100% financing at the competitive interest rates. Even if you are not buying a home for the first time, you can get assistance from USDA. At USDA Home Loans, we have helped several families buy their dream homes or renovate their existing home. We can surely do that for you as well. All you have to do is, get in touch with us and we’ll walk you through the process.
Things you should know before applying for USDA Loans in California
USDA’s loans were designed to encourage home-ownership in the rural areas, but that does not mean you have to buy a home in a farmland. Many properties located close to the metropolitan areas also qualify for the USDA home loans. If you are in doubt whether the property you are considering falls within the limits of USDA home loan program or not, call us and we’ll give you the details.
The next important thing is, you need to qualify for the income eligibility criteria. We can help you with this too. You just need to tell us your requirement. We’ll evaluate whether you are eligible or not and suggest the most suitable USDA loans for you.
How to apply for ow to USDA Loans for California Home Buyers
Here is a quick glimpse of the USDA loan application process in California from the experts at USDA Home Loans:
Step#1: Selecting the Loan Program
USDA home loan program offers different types of home loans depending upon your income. If you have an income that is equal to or below 115% of the AMI (area median income) you might be eligible for guaranteed home loans from USDA, the most popular loan program. For people who have income even less than this, they can get USDA Direct Loans, also referred to as Section 502 Loan. Remember the property you want to buy must act as your primary residence.
Step#2: Qualify Income Guidelines
USDA has pre-defined income limits for each loan program. To qualify for the guaranteed loan program, you need to have an income that is at or below 115% of the AMI (moderate income), for the Direct loan program the income should be below 50% of the AMI (defined as very low income). Income that is between 50% and 80% of the AMI is defined as low income.
Step#3: Check Credit History
USDA home loan program has the most liberal credit guidelines but if you have serious credit issues you need to undergo a review. If a 3rd party lender approves your loan, you might have to prove a decent credit history. The main reasons for loan rejection are outstanding tax liens, bankruptcy or foreclosure within 36 months of the loan application or outstanding collection accounts.
Step#4: Maintain Low Income-to-Debt Ratio
The debt to income ratio is the percentage of your income that goes towards paying different types of bills. According to the USDA loan program guidelines, the qualifying ratios are at 29% for housing costs and 41% for total debts. In some cases, you may have to show higher ratios if the lenders ask for.
Step#5: Verifying the Property
USDA home loans are approved for properties that are located in the USDA approved areas in California. These loans were introduced to encourage people to buy homes in rural areas, but even city dwellers can take advantage of these loans if they want to relocate to USDA approved areas.
Step#6: Contacting Lender
Contact a USDA approved lender to apply for a USDA home loan. Once you’ve submitted the required documents, you are ready to get the loan.
If you have further queries, please get in touch with us today!