What is a USDA Home Loan?
USDA home loans are a type of mortgage for eligible rural and suburban homebuyers, backed by the United States Department of Agriculture (USDA). The program, also known as the USDA Rural Development Guaranteed Housing Loan Program, is a zero down payment mortgage option. It requires borrowers meet income limits based on location of the property, and that the property be in an eligible area.
What are the credit score requirements for a USDA Mortgage?
There is no minimum credit score required to obtain a USDA mortgage. However, most USDA lenders do have a minimum credit score to qualify. While it may be possible to obtain a USDA home loan with a lower credit score, it is widely accepted that a homebuyer with a 640 or higher score is more likely to qualify.
What are the down payment requirements for USDA mortgages?
USDA home loans do not require a down payment. It is a true 100% mortgage program.
Does a USDA Home Loan require mortgage insurance?
USDA’s version of mortgage insurance is called an Annual Fee, which is 0.35% of the loan amount, paid monthly. USDA mortgages also require an Upfront Guarantee Fee, equal to 1% of the loan amount. The Guarantee Fee is usually financed in your loan.
Can I get a USDA mortgage after a bankruptcy or a foreclosure?
A homebuyer may qualify for a USDA home loan after a bankruptcy or foreclosure. Similar to other loan programs, re-established credit is required, as well as the following waiting periods:
Chapter 7 – 3 years, measured from the date of discharge. It may be possible as little as 18 months after discharge, based on a number of factors.
Chapter 13 – 12 months, measured from the first payment under the bankruptcy.
Foreclosure – 3 years, measured from the date the property transferred out of your name. It may be possible as little as 18 months after discharge, based on a number of factors.
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