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USDA Loans

USDA loan program, also known as Rural Development loan, is a type of government-insured home loan that allows the borrower to purchase a new home with no down payment. The loan offers 100% refinancing opportunities to qualified buyers, the closing costs of which can be borne by either the seller or the borrower. USDA loans also carry the lowest interest rates, and are generally fixed rate loans.

Eligibility Rules for USDA Loans

When applying for USDA loans, there are three criteria that need to be fulfilled:

Criterion 1: Credit Worthiness

Whenever the underwriter reviews your credit report for USDA application, one of the first noticeable things will be whether you have paid all your previous bills in a timely manner. Even if there are payment irregularities, the underwriter is likely to overlook them if you have re-established your credit during the 12 months prior to your application. To boost your credit report, pay off any open judgments or collections before closing the deal on your new home.

Criterion 2: Income Rule

Your income needs to be documented before you make an application for any of the USDA loans. The government requires two years’ documented history of your income when you apply for the loan. For students, however, there are exceptions offered to the two-year rule. Assets are not required as collateral against USDA loans. However, if you have any assets, they will help remove all blemishes on your credit report and make a strong case for the loan approval.


Criterion 3: Residency

Unlike other loans, the USDA loans are geography-specific. This means that in order to qualify for the loan, you must be located in a USDA-designated rural area. For this purpose, a licensed AHMC Loan Officer can help determine the USDA eligibility for your County.

In a Nutshell

USDA loans are primarily designed for the nation’s smaller, rural communities. The objective is to help such communities thrive, by making properties affordable for them. Contact Absolute Home Mortgage Corporation today and find out if your area qualifies as a designated rural area under the USDA program and if you can avail USDA loans today.

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