The USDA Mortgage Program: How Do I Qualify To Buy a Home?

Banks and other mortgage lenders have income qualifications in place that may not make it possible for some people to be able to get approved to buy a home for themselves or their family. USDA Mortgages offer people with lower incomes a chance to buy homes in rural areas and have the loan amount backed by the government for 100 percent of the amount of the mortgage. Direct lenders that adhere to federal guidelines are able to service these USDA mortgages.

The mortgages that are made through the approved lenders are guaranteed by the Housing and Communities Facilities Programs(HCFP). In the event a borrower defaults on their loan, the lender will be paid in full by HCFP. Individual borrowers or a family are allowed to borrow up to 100 percent of the appraised value of the home. This means the borrowers can get the home they seek without having to worry about a down payment. The USDA Mortgage Program makes it possible for many Americans who may not have been able to qualify for a mortgage because of a lack of funds to make a down payment to be able to become homeowners.

The qualifications for a USDA Mortgage to buy a home will not be applicable to everyone, but the program does offer a chance for a large percentage of Americans who may not qualify through conventional lenders a chance to become home owners. Those who exhibit a tendency to pay their bills on time and have a steady income that are looking to buy a home in a rural area will now be able to obtain a USDA mortgage. This opens the door for many low income and moderate income families and individuals to become homeowners.

Eligibility Requirements For The USDA Mortgage Program

- Applicants must have a dependable and adequate income
- Must be a U.S citizen, qualified alien, or legally admitted for permanent residence by the United States
- Adjusted annual income may not exceed the moderate income limit that has been established for the area in which the home is located. All adults in the household who have an income must be included in the total gross income of the household. Certain adjustments to gross income, such as child care costs, may be taken into account in order to meet the income qualification.
- Applicant must have a good credit history
- The mortgage payment plus tax and insurance must not exceed 29 percent of the gross monthly income
- Total debts must be lower than 41 percent of the gross monthly income

USDA Mortgage loans can be made on existing or new properties, and there are no restrictions on the design or size of the house being financed. Existing homes must be in good condition, have adequate functionality, and be structurally sound. Homes must be located in a rural area and may not be used as an income producing property. Mortgages are 30 year fixed rate loans given at market interest rates.

People who can not get approved for a mortgage to buy a home through other means may find that the USDA Mortgage Program can help them achieve their goal. While everyone may not be able to qualify for this program, it does open the door for many hard working, creditworthy people to buy a home even though they may not be qualified to receive a mortgage from a conventional lending institution.

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