USDA Income Limits: The USDA loan in MN, WI, or SD does have income limits to qualify. The loan is a "means tested" program, which states that you or your family can't make too much money. There are allowable income adjustments for minor children (family size), child care expenses, and elderly family members. Most moderate to middle income families WILL qualify. You can easily check income limits for your family size, state, and county on the USDA Loan income eligibility web site.
USDA Rural Areas Only: Basically, a rural area for the USDA loan is anything outside a major metropolitan area. This may be closer to the big city than you think, so be sure to check the property eligibility map to make sure the area you wish to buy a home fits USDA's property location guidelines.
Type of Home: The home must be on a publicly maintained road, or in a development with private roads. It must be a single family home (no duplexes), must be owner occupied (no investment homes), and may not produce income.
No business can operate on the property. A hobby farm is OK, but agricultural land that is getting farm income (even from renting part of the land), or any property that will be farmed is not OK.
Properties that have a significant number of building other than the home itself, such as pole sheds, old barns, and old silo's can be an issue with the USDA Loan. be sure to contact us to discuss any questionable properties BEFORE signing a purchase agreement.
Closing Costs: All mortgage loans have closing costs. Lender fees, appraisal, credit report, title company, state taxes, origination fees, and more. These need to be paid for by you the buyer. The best way is always for the buyer to pay cash. But as most first time home buyers have limited funds, you are also allowed with a USDA loan to roll the closing costs into the loan with "seller paid closing costs." You can also pay them by taking a slightly higher interest rate. Under these two options, you are still paying for the closing costs, but you are essentially paying over time versus cash out of pocket today. How cool is that?
Unacceptable Credit Items: If you have any of the following items, you automatically do not qualify for the USDA loan in MN, WI, or SD. You may qualify for other loans (like an FHA loan), so be sure to contact us for more information on other loan options:
We hope this information is helpful. We would be proud to help your home buying dreams come true with a zero down payment USDA rural development loan. Apply online today, have an answer tomorrow.
Tweets by Joe Metzler, Senior Loan Officer. Tweets are Joe's, not the companies.