USDA LOAN

The USDA Home Loan, or rural development loan, is a low-interest government-sponsored mortgage available for designated rural and suburban areas. 

The USDA Loan is a 0% down payment mortgage designed to help low- to moderate-income households purchase, build, rehabilitate, or improve a home. To qualify for a USDA loan, you must purchase a home in a USDA-approved area and meet certain income requirements.

CMG Financial has been named a Best USDA Mortgage Lender by Business Insider.

USDA Loan Eligibility 

To apply for a USDA Loan, you must have: 

• Proof of citizenship (or legal permanent residency)
• A minimum credit score of around 620 (credit score requirements might vary per borrower)
• A debt-to-income (DTI) ratio of 41% or less 
• Have an income no higher than 115% of the median household income in your area
• Be financing a primary residence in a USDA-approved location

USDA Loan Credit Score Requirements

The USDA loan has no minimum credit score requirement; however, most lenders look for a FICO® credit score of at least 620.  For those with lower credit scores, a USDA loan may still be possible with manual underwriting, depending on other individual financial circumstances.

USDA Loan Down Payment Requirements

USDA Loans are one of two major mortgage products that offer 100% financing — meaning that no down payment is required. 

USDA Loan Debt-to-Income Ratio (DTI) Requirements

Strive for a DTI no higher than 41% when applying for a USDA Loan. Your DTI is your total recurring monthly debts (student loans, credit card payments, etc.), divided by your monthly pre-tax income, expressed as a percentage.  For example, if your rent is $1,000 per month, your car payment is $500 per month, and your monthly credit card payment is $800, your total monthly debt is $2,300. If your gross income is $6,000 per month, then your DTI is roughly 38% (2,300 ÷ 6,000 = 38.3).

USDA Loan Income Eligibility

USDA loans are only available for low- to moderate-income households. To be eligible for a USDA loan, your income must not exceed 115% of the median household income in your area. To check your USDA income eligibility, visit the USDA website.

Mortgage Insurance for the USDA Loan

There is no mortgage insurance requirement for USDA Loans. 

Properties Eligible for a USDA Loan

Eligible USDA properties are single-family, primary residences located in designated rural or suburban areas. You can locate USDA eligible areas by searching the USDA loan eligibility map. There is no maximum purchase price or acreage limit, however all residences must meet HUD’s minimum requirements. 

How to Apply for a USDA Loan

To apply for an USDA mortgage you will need to provide the following:

• Proof of income and employment (pay stubs, tax returns, W-2 statements etc.)
• Proof of citizenship and home location
• Documentation of financial assets (bank statements, etc.)
• Residential history (previous two years’ worth)
• Your credit history (it’s also a good idea to check your credit report - not score - here)
• Identity information like your driver’s license, Social Security card, and date of birth in order to apply

To start your USDA Loan application and get preapproved click here, to find a local loan officer click here.

If you have questions and want to speak to someone right away, give us a call at 1.413.222.1938.