If you are in the market for a home and are interested in securing USDA financing, you likely wonder how you will find USDA homes for sale. Is there a list that you must follow or a website that will show you all of the homes for sale in your area that qualify for this financing? Unfortunately, the answer is no. There are no magic lists that will point you to the homes – what you will find, however, is a list of areas that fall under the USDA guidelines – this is what you are after when you are trying to purchase a home with this no down payment required loan program. The USDA operates on areas rather than individual homes that are approved. Once you find the area you want to move into, you will have to use the help of a realtor to determine which houses fit within the USDA parameters.
Rural Areas Only
The largest rule when it comes to USDA financing is that the home must be located in a rural location. USDA homes for sale will be found outside the city limits and in areas that have a population of less than 20,000 people. The catch here is that these figures are not as current as you might think. The USDA still uses figures from the year 2000 to determine an area’s eligibility. This can be used to your advantage until later this year as the boundaries are going to change after October 1st. Right now, though, there are many areas that are still being considered rural, despite their population being well over 20,000 over the last few years. If you are unsure about which areas are still considered rural, you can visit the USDA website to see if your area applies. The website is user friendly and will provide you with the answers you need.
USDA Homes for Sale
Once you find the right area, you will need to find what the USDA considers a “modest” home. This means a home that fits well within the area’s means. This makes sense since the USDA loans were created to promote growth in rural areas and since they require no money down on the purchase of the home. Just what defines a modest home is still open to interpretation as there are no written guidelines defining this exact term. The only documentation that the USDA has provided is that pools, separate buildings from the home and non-conforming bedrooms (such as those in a basement) are not allowed. In addition, the home must be in good, living quality. It cannot be in poor condition and receive a guaranteed loan from the USDA.
Flood Zones not Allowed
Homes that are in a flood zone have a difficult time getting financing and the USDA is no exception to that rule. In a majority of cases, the USDA will not guarantee a loan for a home in a flood zone. There are a few exceptions to the rule, but the case really needs to be pleaded with the USDA in order to get it approved. Homes within flood zones provide such a high risk level for the lender that the USDA simply cannot afford to lend to homes in those areas.
Financing USDA Homes for Sale
Once you find the USDA home that you want to purchase, the loan process is rather straightforward. It is best to have all of your paperwork together and ready for the lender at once as this allows him to approve the loan and package it for USDA approval. This process could take a little while longer than other loans, which is why it makes sense to have everything ready for the lender. You will have less documentation requirements with this type of loan because they are less stringent about income and do not require any assets. If you are taking advantage of the 0 percent down payment requirement, you will not have to show any assets. In addition, if you are rolling the upfront mortgage insurance fee into the loan, your closing costs will be minimal. All of these factors make the documentation needed for loan approval much lower than other loans.
There are still many USDA homes for sale throughout the United States. Since the requirements will soon be changing, if you wish to purchase a home with this great financing, you will need to do it quick. The USDA has said that they will accept loan packages up until September 30, but the packages must be complete and ready to be approved. Any packages that arrive after September 30th or arrive incomplete will not be approved under the old boundaries. If you want to get into a home that may not be rural after the new deadline, time is of the essence to get your financing while it is still available.
