USDA Guidelines

Borrower Eligibility

  • U.S. citizens
  • Permanent resident aliens
  • First time homebuyers allowed
  • Non-occupant co-borrowers NOT allowed

Commitment Fee

  • USDA charges a 1% Commitment Fee
  • Commitment Fee can be financed into the loan
  • Example:
    • Purchase price - $100,000
    • Base Loan amount - $100,000
    • Commitment Fee - $1,010 ($100,000 [purchase price] /.99 - 100,000)
    • Maximum financed loan amount = $101,010

Downpayment Requirement

  • No down payment is required
  • If borrower has adequate liquid assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan

Eligible Properties

  • Must be in an eligible USDA Rural Development Location
  • Owner-occupied properties
  • Existing attached & detached single family residences
  • New construction with permanent financing only
  • PUD's (i.e. Townhomes)
  • Condo-units. HUD, VA, FNMA or FHLMC approved project

Ineligible Properties

  • Co-ops
  • Mixed-use
  • Condotels
  • Manufactured homes
  • Log cabin homes
  • Single Family Homes where the land value excess 30% of the appraised value and can be sub-dividend.

Loan Amount

  • Minimum loan amount: $80,000. (Note, this is an internal lender guideline. The USDA Loan program has no minimum loan amount guideline. If you are purchasing a house with a price less than $80,000 contact other lenders to determine if they will service your mortgage requirements.)
  • Maximum loan amount: No limit. The maximum loan amount that a borrower can qualify for will be determined by the borrowers debt to income ratio and Guaranteed Underwriting System’s findings

Maximum Income Amount

Maximum Loan-To-Value

  • Maximum loan-to-value is 101.01%

Maximum Mortgage Amount

  • None

Minimum Credit Score

  • Middle Credit Score - 640 for each applicant for GUS automated underwritting approval
  • Middle Credit Score - 620 for each applicant for manual underwritting approval and a documentable rent history within the last 12 months

Monthly Mortgage Insurance Premium (MIP) Requirements

  • USDA requires a monthly mortgage insurance premium with an annual factorial of .35%

Multiple Property Ownership

  • USDA primarily often won't allow applicants to own other properties
  • Exceptions include when the other property owned is:
    • Not owned in the local commuting area as the new property; or
    • Not structurally sound and/or functionally adequate
  • Manufactured home not on a permanent foundation

Occupancy Type

  • Owner occupied only

Qualifying Ratios

  • 29/41% debt-to-income (DTI) - Target
  • 33.99/45.99% debt-to-income (DTI) - With compensating factors such as:
    • 680 or higher credit score
    • No or low "payment shock" - less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses
    • Fiscally sound use of credit
    • Ability to accumulate savings
    • Stable employment history with 2 or more in current position or continuous employment history with no job gaps
    • Cash reserves available for use after settlement
    • Career advancement as indicated by job training or additional education in the applicants profession
    • Trailing spouse income - as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area
    • Low total debt load

Occupancy Type

  • Owner occupied only

Seller Contribution

  • 6% of sales price towards closing costs, prepaids, discount points, buydown fees, and upfront Commitment Fee

Transaction Types

  • Purchase
  • Rate/Term Refinance on existing USDA loan

Receive loan approval from an approved USDA lender

  • To determine your eligibility for a mortgage loan complete a loan application using our secure encrypted online application.