There are a number of requirements that properties need to meet in order to qualify for a USDA Guaranteed Home Loan. The home needs to be readily accessible from the road, while posing no safety hazards to people using driveways or walkways. The foundation needs to be structurally sound, containing no cracks, or moisture intrusion, as well as adequately draining water away from the foundation. The walls of the home, both interior and exterior, must not show any structural fatigue, failure, rot, or bowing. It also must be free of mildew, and peeling, chipping and loose paint. All doors must be in good working condition, exhibiting no holes or functional defects. Exterior doors must also have functioning locks. All framing must be structurally sufficient. Windows must function and lock properly, be unbroken, and must be energy efficient. Interior floors must not be heavily damaged, worn, or soiled; they must be expected to last for at least five (5) more years. Garages must functional and have no obvious deficiencies; if attached to the home it must have a 1 hour fire wall in place, and maintained. Porches and decks must be structurally sound. The roof of the property must be free of leaks and expected to last for at least five (5) additional years. Gutters must be properly installed and have an appropriate drainpipe at the end of each. Cabinets and vanities within the home must be in fully functioning condition. Stairs cannot have any signs of structural issues, and are required to have a handrail if there are more than three risers, unless otherwise stated by State building code. Both electric and plumbing must be in adequate working order, and functioning. If heating and air conditioning is present, its components (exhaust fans, vents, etc.) must be in good working order. Sump pumps must comply with local regulations. The home must be free of all wood damaging pests and organisms. The USDA guaranteed program includes, but is not limited to these requirements.
If you are considering buying a home it is important to know all your options. I believe the USDA home loan program is one of the best products on the market because it really works for most home buyers.
Even if you are a home seller, it is just as important to know the different loan programs available so you’ll have an understanding of what each offer could potentially cost or save you if you accept it.
How do you know if you should keep reading and if USDA financing is right for you?
- Are you a family of up to 4 with an annual income of $74,750 or less?
- Are you a family of 5 or more with an annual income of $104,000 or less?
If you are, and you want to buy a home (and you plan on living in the home), you should keep reading and strongly consider getting qualified for USDA home financing.
USDA Guidelines and Qualifications
- 100% Financing
- You can still qualify even if you are not a first time home buyer! This is not only for 1st time home buyers.
- No Manufactured Homes. USDA will not lend on any mobile or manufactured home. The house must be stick built.
- No Income producing properties. I.e. No Livestock Buildings or Barns. The property cannot have the ability to produce income. A detached garage is okay, and even a tool shed is okay… but USDA will not lend on any property with an outbuilding that can house livestock, horses, chickens, etc.
- Must Be Owner Occupied.
- Low Mortgage Insurance Premium. You will be expected to pay a low mortgage insurance premium for as long as you have the loan. The premium will diminish over the life of the loan and is usually about 1/3 of what a typical FHA mortgage insurance premium is.
- Upfront Funding Fee of 2% of the loan amount.
- Buyers with excessive cash reserves or 20% down or more may be ineligible for USDA.