What Are the Income Limits for USDA Home Loans?

Backed by the U.S Department of agriculture, the USDA home loan is a great way for people in the low to moderate income group to buy a home in a rural area. The most attractive thing about this loan is that it allows people qualified for the loan to buy a home at 0% down payment. What makes a person eligible for the loan? A person is eligible for the USDA loan if they meet the conditions listed below:

  • S citizen or permanent resident
  • The monthly mortgage payment is less than 30% of what you earn each month. The monthly payment includes the principal, interest, insurance, and taxes.
  • Dependable income for at least a year
  • A decent credit history i.e. meets a minimum requirement of a 640-credit score

You’re probably wondering what a dependable income for a year means. If that is the case, then read on to find out the income requirements for the USDA loan.

The USDA Loan Income Limits

The purpose of the USDA loan is to make it possible for people in the low-to-moderate income groups to buy a home. The basic income requirement for the loan is that the household income of the applicant should not be more than an area’s income limit. You most likely meet the USDA loan’s income eligibility requirements if your income is equal to or less than the income limit for your area.

While the income limits for the USDA loan may vary with the region, the base-income limit is the same throughout the country. The base income limits for the USDA loan are:

  • $82,700 for a household of 1 to 4 members
  • $109,150 for a household of 5 to 8 members

As seen above, the income limits for households with 1 to 4 members is different from income limits for households with 5 to 8 members. In addition to this, the income limit will be higher for households in high-cost counties than households in counties with a reasonable cost of living.

Whether you fall into a low-income or moderate-income family category, the USDA will look for a minimum of two-year employment history with consistent income. However, relaxation can be given on the two-year requirement if the applicant is a student. No collateral is required to secure the USDA Loan. However, the assets used as security for the loan can help to overcome any credit imperfections of a USDA loan applicant.

The home purchased with the USDA loan needs to be in an area or location designated for the purpose by the USDA. The USDA designated areas or locations are present throughout the country. If you fulfill all the above requirements including the income limits for your area, then you will be in a good position to apply for and secure a USDA home loan.

To know more about the income limits for USDA home loan, get in touch with us today!

Can I Refinance My Current Mortgage into a USDA Loan?

If you live in a rural area and want to save money on a home purchase, then USDA home loan can be a great option for you. A home loan guaranteed by the U.S Department of Agriculture, the USDA loan allows qualifying borrowers to buy a home at zero down payment. That’s not all! The Department of Agriculture also makes it extremely affordable for existing borrowers to get USDA refinance.

First things first, you should be clear that you can refinance your loan through USDA if you bought your home using a guaranteed or direct loan. USDA direct loans are loans obtained directly from the U.S Department of Agriculture. These loans are designed for people in the low to very-low income group. If you earn between 50 to 80% of the average local median income, then you are eligible to apply for a USDA direct loan. Lower interest rates make a monthly payment of this home loan affordable.

USDA Guaranteed loans are provided by USDA-approved lenders. These loans allow borrowers to get low mortgage interest rates. However, to qualify for these loans, the borrower must have a credit score of 640 or over.

Types of USDA Refinance

When it comes to refinancing, borrowers of USDA loans have three options: streamlined refinancing, non-streamlined refinancing and pilot program. Following is a brief look at each:

Streamlined Refinancing

No credit check or appraisal is required for this refinancing option. Streamline refinance is offered to borrowers of guaranteed loans. The eligibility of a borrower is determined using their payment history.  The refinance amount cannot exceed the existing loan’s principal. Additionally, there is a guarantee fee which amounts to 0.5% of the loan amount.

It is important to note that you can secure this refinancing option only if you have a USDA guaranteed loan. Also, you can’t fold the lender fees and closing costs into the refinanced loan.

Non-Streamlined Refinancing

This refinancing option mandates a credit check and appraisal. Additionally, the borrower is checked for income qualification. This type of refinancing is available to borrowers of both direct and guaranteed loans.

With non-streamlined refinancing, it is possible for you to fold the lender fees, the guarantee fee, and the closing costs into the loan. However, you are required to have a certain level of equity in the house for this. The amount of loan cannot exceed the home’s fair market value. The appraisal process determines this market value.

Pilot Program

Offered to borrowers of both direct and guaranteed loans, the pilot refinance program is available in only a few U.S states. An appraisal is not needed for getting refinanced with this option for a guaranteed loan. However, borrowers of a direct loan will be subjected to an appraisal before they are awarded refinancing. The good news for borrowers is that they can fold the lender fees, the guarantee fee, and the closing costs into the loan.

There you have it—the three types of USDA refinance that you can obtain. To know more about refinancing USDA loan, get in touch with us today!

3 Ways to Get the Best VA Loan Rates

A loan facility availed by millions of American veterans to date, the VA home loan is the loan program that allows veterans in the country to secure a mortgage. The VA loan is a great home financing option for veterans who have left the service. For veterans such as you, there are many benefits of securing this home loan including:

  • Low interest rates
  • Easier to qualify for than traditional loans
  • Zero down payment
  • No mortgage insurance
  • Low closing costs
  • Acceptability of higher debt-to-income ratios

It is evident from the above that securing a VA loan is a great option for veterans who want to buy a home. You are eligible to apply for and secure the VA loan if you meet the following eligibility requirements:

  • Served for 90 days straight during a war
  • Engaged in active service during peacetime for 181 days
  • Have Served National Guards or Reserves for over 6 years
  • Spouse of a service member who died in the line of duty

If you meet the above criteria for the VA loan, then the next step should be finding a lender that offers the best VA loan rates. The steps involved in this are explained next.

The 3 Steps to Get the Best VA Loan Rates

The interest rates of VA loans are lower than the rates offered for conventional loans. However, the VA loan rates vary according to the lender and your financial situation. If you want to get the best loan rates, then you need to follow the below steps:

1. Start by Checking Your Credit

Your VA mortgage rates will depend a lot on your credit score. Although veterans with a less than perfect credit score can secure the VA loan, the mortgage rates they get will depend on how good or bad is their credit score. Therefore, the first thing you should do is look at your credit report and fix or improve any credit problems that you find in it. This will help you in your bid to get the best VA mortgage rates.

2. Get Pre-Approved

Before you start searching for a home, get pre-approved for the loan. This will not help to determine if you qualify for the loan and what loan rates you can realistically get. The pre-approval will be carried out by a VA lender. The lender will ascertain your purchasing power by reviewing and verifying your income and other financials. This will help them to determine your eligibility for the loan and the mortgage rates you qualify for.

3. Consider Making A Down Payment

While it is possible to secure the VA loan with zero down payment, you can get a lower the interest rate by making a down payment that is equal to or greater than 5% of the price of the home. If you can afford a down payment, then getting the best VA loan rates is very much possible.

If you are looking to get the best VA loan rates, then we can help you out. Contact us today for more information!

Why Choosing the Right VA Lender Makes All the Difference?

Buying a home is one of the most important experiences for most people. Since you are here, we are assuming that you are a veteran and have the option of taking a VA loan because of your service. A great benefit for veterans to have, buying a home through VA loan requires you to find the right company or lender for the loan.

The right VA lender can make it easy for you to get approved for and acquire the loan. Another benefit of working with the right lender is getting pre-qualified for the VA loan. When you apply for the loan with a spotless credit history and a decent amount of savings for the home purchase, you can get the best interest rates.

However, if you are unsure about your credit scores or debt-to-income ratio (DTI), you can make the required improvements by getting pre-qualified with one of the lenders. The right VA lender will educate you on improving your credit. This, in turn, will allow you to improve your credit for the VA loan. Now let’s look at some steps to choose the right lender for the VA loan.

1. Make Sure the Lender Is Approved by the VA

Of course, the first step to choosing the right lender is ensuring the lender is approved by the Department of Veterans Affairs (VA). If a lender meets this criterion, you can move onto the next step in choosing the right lender.

2. Expertise in the VA Loan Process

The right lender will help through every step of the VA loan process. Whether it’s getting an eligibility certificate, securing an interest rate, or attaining underwriting approval, the right lender has the expertise to get you through the step.

3. Customer Service and Satisfaction

An important step in choosing the right lender is finding out about the customer service of the lender. Determine the level of satisfaction customers have with the lender. To find this out, go to review sites such as Yelp, Google etc. Also, if possible, talk to veterans who have worked with the lender in the past. This will give you a good idea of the lender you’ve chosen.

4. Ask the Right Questions

Ask the lender questions that give you an idea of their history, expertise, and the fees/amount they are likely to charge you for providing VA loan service. Following are some questions to ask the lender:

  • What is the credit score that I need for the loan?
  • What is the maximum debt-to-income ratio that I can have to get approved for the loan?
  • Do I need an eligibility certificate?
  • Do you have the knowledge to educate me about the loan and improving credit score if needed?
  • What is the fee structure?
  • How do your rates compare to other lenders?
  • Will the same loan officer work with me from the beginning to the end of the VA loan approval process?

Once you have the answers to the above questions, you will be in a good position to decide if the lender is right for you or not. If you’re looking for the right VA lender, then get in touch with us today!

What Is the VA Funding Fee and Why Do I Have to Pay It?

VA loans offer one of the best ways for U.S veterans to buy a home of their own. Approved by the Department of Veterans Affairs and facilitated by VA-approved lenders, the VA loan is an attractive option because of its affordability. To secure home ownership through a VA loan, a veteran does not need to make a down payment nor are they required to get private mortgage insurance.

However, there are a few costs that you will have to incur to secure the VA loan. One of the primary costs associated with the VA loan is the VA funding fee. This fee is applicable to every VA loan. The purpose of this is to keep the overall VA loan cost under check. Although it cannot be refunded, payment of the fee can be made after loan closing and then financed into the loan. This is the option that most borrowers choose to take. Let’s now get into the details of the VA funding fee and why you need to pay it.

Making the Funding Fee Payment: Why It is Necessary

A fee charged by the government, the funding fee is applicable to all VA purchase and refinance loans. The Department of Veterans Affairs collects this fee and uses it to cover any losses. The VA also collects the fee to keep the VA loan program running into the future for eligible veterans. The funding fee is not constant and can change over time based on several factors. This includes the type of the loan and whether the veteran used the benefit before.

Compared to Reservists and members of the National Guard, members of the regular military pay a slightly lower funding fee for the VA loan. Additionally, some select veterans such as people with service-connected disabilities may get a complete exemption from paying the fee. So, unless you are exempted from the payment, you will have to pay the funding fee to secure a VA loan.

VA Funding Fee for VA Purchase and Refinance Loans

As mentioned earlier, the funding fee is applicable to all VA purchase and refinance loans. The amount to be paid will vary depending on the type of loan, type of military personnel, and the amount of VA loans previously used. Following are two tables showing the fee for VA purchase and refinance loans.

Funding Fee for VA Purchase Loans

Veteran TypeDown Payment1st Time UseSubsequent Use
Regular MilitaryNone2.15%3.3. %
 5% -10%1.50%1.50%
 10% of more1.25%1.25%
Reserves/National GuardNone2.4%3.3. %
 5%-9.9%1.75%1.75%
 10% or more1.5%1.5%

 

Funding Fee for VA Refinance Loans

Service1st UseSubsequent Use
Regular Military2.15%3.3%
Reserves/Guard2.4%3.3%

 

There you have it—the VA funding fee structure for both the VA purchase and refinance loans. To know more about the funding fee and the amount you will have to pay, get in touch with us today!

What are the Benefits of Getting a VA Loan?

First rolled out just before the close of the Second World War, the VA Housing Loan Program has been availed by millions of American veterans to date. Offered by the U.S. Department of Veterans Affairs (VA), the VA Housing Loan Program is the only option available for veterans in the country to secure a mortgage.

In the wake of the great recession of 2008, the demand for VA loans has soared greatly. This is due to the significant financial benefits that VA loans provide many veterans who might otherwise fail to qualify for a mortgage. For a lot of U.S veterans, getting a VA loan is the only available path to home ownership.

The VA Housing Loan Program has been created to allow not just U.S veterans, but also widowed military spouses and active duty service members to secure home ownership. This Program from the U.S. Department of Veterans Affairs has grown in popularity over the years. This is mainly because of the benefits of a VA loan. What are the benefits of a VA loan that attract veterans? They are as under:

1. Zero Down Payment

This is the foremost benefit of the VA Home Loan Program. There’s no need for veterans to make a down payment to secure the mortgage. Traditional and Federal Housing Administration (FHA) loans require borrowers to pay a down payment of 5% and 3.5% respectively to secure the home loan. For veterans, it could take years to save this kind of money. The VA Housing Loan Program saves veterans from this trouble by allowing them to buy a home with 0% down payment. This is the least they deserve for serving our country, often in the worst of conditions.

2. No Mortgage Insurance

Since the mortgage is insured by the U.S government, veterans do not need to get monthly mortgage insurance when looking to secure a VA loan. According to VA estimates, this will result in overall savings of billions of dollars in insurance costs for veterans over the life of their loans.

3. Flexibility

Another great benefit of a VA loan is the flexibility that it offers. Veterans can buy a home of their choice using a variety of financing options. For instance, they can choose between constructing a new home or improving an existing house. Additionally, they can choose between a manufactured home, a condo, or a conventional home.

4. Less Taxing Credit Requirements

The Department of Veterans Affairs does not set or enforce any credit benchmarks. This is because it neither issues the loan nor supervises the loan program. Instead, the credit score requirements are evaluated by VA lenders using a borrower’s risk of default. The number that most VA lenders are looking for is 620. This is within the fair credit range of Fair, Isaac and Company (FICO).

As seen above, there are many benefits to getting a VA loan. If you want to avail all these benefits of a VA loan, then get in touch with us VA loan for Vets today!

How Do USDA Loans Work?

If you qualify for a USDA home loan, then you have a fantastic opportunity to secure a mortgage with zero down payment and at a competitive interest rate. Available to both first-time and recurring buyers, the USDA home loans are provided by private lenders but guaranteed by the U.S Department of Agriculture (USDA).

The biggest reason to apply for a USDA home loan is getting a government-backed home loan for a $0 down payment. Offered through the Office of Rural Development, USDA loans are meant to boost home ownership in rural areas. Similar to other mortgage options backed by the government, such as VA loans, USDA loans require the borrower to go through the following steps to secure the home loan:

  1. Collaborate with a USDA-approved private lender
  2. Get pre-approved
  3. Put in the offer for a home
  4. Complete the USDA loan appraisal process
  5. Lender underwriting
  6. Close the deal

Types of USDA Home Loan Programs

Following are the three types of USDA home loan programs:

1. Guaranteed Loan

Similar to VA or FHA loans, USDA Guaranteed loans are provided by USDA-approved lenders and they allow borrowers to get low mortgage interest rates. However, since these loans are guaranteed by the government, they are a little stringent in their credit score requirement. To qualify for a guaranteed loan, a borrower must have a credit score of 640 or over.

2. USDA Direct Loan

As the name suggests, USDA direct loans are loans obtained directly from the U.S Department of Agriculture. Designed for people in the low to very-low income group, direct loans are issued by the USDA and have interest rates that vary according to the region. In some places, the interest rate can be as low as 1%.

If you earn between 50% and 80% of the average local median income, then you are eligible to apply for a USDA direct loan. Compared to the standard thirty years, the direct loan has a longer duration of 38 years. Additionally, lower interest rates make monthly payments more affordable. To secure the loan, potential borrowers need direct assistance from the local office of Rural Development.

3. Home Improvement Loan and Grants

The third and final type of loan offered under the USDA home loan program is the home improvement loans and grants. Obvious from the name itself, home improvement loans and grants allow borrowers to renovate or upgrading their existing home. The loan amount can be as much as $27,500.

Basic Requirements to Qualify for a USDA Home Loan

You are eligible to apply for a USDA home loan if:

 

  • You are a U.S citizen or permanent resident
  • The monthly mortgage payment is less than 30% of what you earn each month. The monthly payment includes the principal, interest, insurance, and taxes.
  • You have a dependable income for at least a year
  • You have a decent credit history i.e. meet a minimum requirement of a 640credit score

If you meet the above requirements and are looking to pre-qualify for a USDA home loan, then we can help you with that. Get in touch with us today to find out how best to apply for a USDA home loan!

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