USDA loans are not a widely known product, but they should be because they offer borrowers a multitude of benefits starting with a zero percent down payment! The problem is that there are specific restrictions you must meet in order to qualify. The no down payment and ability to finance the mortgage insurance right into the loan is a great way to afford a USDA loan, but getting into one could be a different story. The hardest restrictions to meet are the income requirements and the property requirements.
What are the USDA Income Requirements?
The income requirements for a USDA loan work quite the opposite of any other loan type. Rather than requiring you to make more money, this loan program rewards you for making less money. This is because the program is geared towards low and middle-of-the-road income families; it is not a program for the wealthy. This is why there are income restrictions. The restrictions are not straight across the board either – there are many different maximum values depending on the area that you live. The maximum amounts are based on the cost of living in the area as well as the average salary for the area. You can find the particulars for the count you live or wish to live in on the USDA website. You simply enter the following information to determine if your income would qualify:
- The state you live
- The county you live
- The amount of your gross monthly income
- The amount of your co-borrower’s gross monthly income
- The number of people living in your home
- The number of children under the age of 18, disabled people, and full-time students that live with you
- Annual child care expenses
- Any other income (commission, overtime, bonus, etc._
Talk to a lender to see if you qualify»
The USDA website will then let you know if you qualify for USDA financing based on those qualifications.
A Closer Look
Your income is not the only factor the USDA looks at to qualify you for the loan, though. They provide you with allowances to lower your income to make your chances of getting approved higher. These allowances are provided to parents with children under the age of 18 living with them; parents with full-time students over the age of 18 living with them; people with disabled relatives living with them; and people with elderly people over the age of 62 living with them. Each person that falls into one of the above categories gives you a $480 per month deduction with the exception of any elderly people living with you – they provide you with a $400 deduction.
The Property Location
The other hardest restriction to meet on a USDA loan is the property location. Technically, this loan program is for rural properties. When most people think of rural, they think of farm or way out in the country type living. Fortunately, that is not what the USDA deems rural. If you look on their eligibility map, you will see that there are a large number of areas that fall into the eligibility for this loan type. You can put in an individual address to see right away if a property you are interested in purchasing is eligible or you can look at the general area of where you are looking to see which locations you need to stick to in order to qualify for a USDA loan.
Generally, USDA loans are not hard to qualify for, especially if you are a low or middle-of-the-road income family. If you are having a hard time finding a home in a rural area, enlist the expertise of a realtor that deals with USDA properties so you can find a home that you can use this lucrative financing program on to get the home you desire.
