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What are the requirements for the USDA program in Vandalia? So that’s going to be looking at a 640 minimum credit score requirement.

There is a income requirement too when applying for a USDA Loan Vandalia.

So basically the income requirement is about 78,000 if you’re in a family of 1 to 4 if you’re in a family of 5+ that’s gonna go up to about $103,000 on the income limit.

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The big requirement for USDA is that it’s property specific.

It’s got to be in a USDA Approved Zone. How much down payment does this program require?

It’s actually 0% down payment which is Great!

Ok Awesome, and how much does the average home buyer come in with out-of-pocket?

So because your down payment for a USDA Loan in Vandalia is covered you’re just gonna have to come in with again your prepaid and closing cost So if it was a $300,000 purchase.

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you’d be looking at about $7,500 cash for keys to get in the home.

What type of home buyer is the USDA Loan program Ideal for? So this is going to be ideal for the home buyer that’s looking for a property in those specific areas.

Ideally it’s properties that are going to be USDA Eligible rural zones.

So not right in the middle of the city, but maybe if it’s more on the outskirts, on a little bit of land, lower tax rate areas that’s probably going to be a property that’s eligible and that would be ideal because that one would probably qualify OK, Fantastic.

What is a USDA Home Loan?

I bet you’re wondering, what is a USDA home loan?

Designed with the residents of more rural areas in mind, the United States Department of Agriculture designed its loan program to enrich rural communities by providing affordable home loan options to low-income households that may not be able to secure home financing through other means.

Who has time to stop and smell the roses? You don’t, and this isn’t even a rose.

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What are the requirements for the USDA program?

So USDA has a few interesting requirements First of all, you’ll need to have at least a 580 credit score Some lenders require a 620 credit score.

Your household income has to be under the county maximum Like a lot of down payment assistance programs. This is based on family size So 1 to 4 is one category and then 5 and above is a higher threshold for qualifying

What’s unique about this one is the home has to be within a designated area.

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So, Typically what that means is.

NOT within a metropolitan area So within our area here (Riverside county) Our local cities around her don’t qualify But we only need to go 10 miles away to where there’s an open area where there’s Several homes that qualify.

USDA stands for United States Dept of Agriculture But it’s NOT a farm loan.

Specifically, they don’t finance this program for farms in Vandalia.

It has to be a Single Family home in the Vandalia area, without a barn structure on the property.

Then it also has some home price limitations.

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The Threshold is a little bit lower than say an FHA loan for the loan limits.

Ok, and how does this program differ from other Down payment programs?

So it’s different because it’s not really a down payment program but it allows financing up to a 100% of the purchase price And it’s interesting because you can actually use this program with 1 or 2 of the other programs.

If you need closing cost assistance But, what’s unique it’s a 100% Financing so you don’t need a 2nd or a 3rd lien on the property.

Your interest rates are typically lower than if you combine it with a down payment assistance programs and you don’t have to repay any down payment assistance.

It has a monthly factor It’s like mortgage insurance upfront It’s financed at a monthly component.

Much less than FHA So if you can qualify for this program It’s better than FHA And As I mentioned, rates and payments Are typically lower on this program So USDA is really a great program.

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Great!

And on average How much does the home buyer have to come in with out-of-pocket?

So Again, we are financing the whole loan Purchase price up to 100% So the only thing remaining is then the closing costs Typically, plan on around 3% of the purchase price for funds to close.

The question there then becomes, Well, Where does that come from? Typically, we ask the seller to cover those costs And if we can get the seller to cover 3% Then, the buyer may only need to come in with an earnest money deposit.

And they may even get most or all of that back.

If the seller is covering all the fees.

One unique feature about USDA Versus all other loans is that if the home appraises for more than the purchase price.

We can finance the closing costs up to that appraised amount So, no other loan I know that we can actually finance the closing costs.

What type of home buyer is this program ideal for?

So certainly those that don’t have access to money for a down payment Anyone that wants to live that doesn’t have to live within a metropolitan area because, again, the house has to be in an area that is not in a high densely populated area.

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It’s also suited well for people who have some credit issues and anybody that qualifies for this program would definitely be better served than going FHA so those type of people.

And besides the Area restrictions are their any other property restrictions? So property restrictions are going to be similar to FHA They’ll do manufactured homes.

They’ll do homes with Casitas So no real other restrictions.

Just if it conforms to the FHA guides then it should qualify for USDA There’s a couple little quirky things that you don’t run into very often like you can’t actually have a barn on the property It definitely can’t be for agricultural purposes It has to be for residential purposes.

USDA Loans in Vandalia – Do You Pre-Qualify?

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They also don't have to pay mortgage insurance.

Another benefitto veterans is that the debt to income ratio is lower, so they can qualify formore house.

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USDA Home Loan Explained - 5 Things You Need to Know About USDA Loans

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Benefits of a VA Loan The following are benefits that you can enjoy from a VA Loan that you can avail from Fairway Independent Mortgage Corporation 0% Down Payment Conventional loans generally require up to 20% down payment in order to secure a home loan.

But for those who are qualified, the 0% down of VA Loans is a lifeline.

No PMI Private Mortgage Insurance (PMI) is a requirement for borrowers who finance more than 80% of their home's value.

It results in an additional monthly expense.

Since VA Loans are government backed, banks do not require you to buy PMI anymore.

Competitive Interest Rates Conventional loans without government backing have less competitive interest rates because banks are taking on more risk.

The VA guaranty is advantageous since it gives lenders a greater degree of safety and flexibility.

This means that the borrower gets more competitive rates than non-VA loans.

This, along with no PMI, can substantially lower your monthly payment.

Call Fairway Mortgage at 843-757-7552 NOW! Easier to Qualify VA Loans are easier to qualify for because the loan is backed by the government.

Therefore, banks assume less risk and have less stringent qualification standards for applications under VA Loans.

On the other hand, non-VA loans hold stricter qualification procedures which makes it harder for prospective homebuyers to qualify.

Basic Allowance for Housing Basic Allowance for Housing (BAH) is a significant benefit for qualified active military members.

Lenders can count your Basic Allowance for Housing as effective income.

This allows borrowers to use BAH to pay some or all of their monthly mortgage costs.

BAH varies based on the borrowers: Pay grade, Geographic location, Number of dependents No Pre-Payment Penalty The pre-payment penalty is the result of paying off a home loan before it matures.

It is a way for financial institutions to recoup some of the interest payments that lenders miss to collect.

The VA Loan allows borrowers to pay off their home loan at any point without having to worry about a pre-payment penalty.

With the absence of a pre-payment penalty, borrowers are free to consider future home purchases and refinancing options.

Call Fairway Mortgage at 843-757-7552 NOW!.

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