USDA Loans: Homeownership Could Be Within Your Reach with a USDA Rural Development Single Family Housing Guaranteed Loan Program

 A few days ago, I had lunch with a friend of mine, a single mom with two kids. During the course of the conversation, she lamented the aggravations of apartment dwelling, and that she would love to get her own place, a place with a yard, but was afraid with her income, it would never happen.

            As a realtor, I stay on top of the various loan programs out there, and I turned her on to the USDA’s Rural Development Single Family Housing Guaranteed Loan Program. This loan is designed for people just like my friend. The purpose of this loan program is to assist low to moderate income rural homebuyers achieve their dream of homeownership. The loan program requires no down payment, offers 100 percent financing and a 30-year fixed interest rate, doesn’t require private mortgage insurance (also called PMI), and has no restrictions on size or design of the home.

            Initially, she balked at the idea of living in a “rural” community, but I quickly explained that “rural” doesn’t necessarily mean middle of nowhere. Many communities in easy driving distance of Dallas, Fort Worth and many other employment centers are eligible for the program. Examples include Anna, Melissa, Princeton, Prosper, Farmersville, Fate, and Royse City among many others. And there’s many subdivisions in those communities - new and established - to choose from.

            The program does have eligibility requirements. Since the loan is designed for low to moderate income homeowners, there are income caps. In general, a family of up to four individuals living in Texas can make $74,750; families up to eight members can make up to $98,650.

            There are exceptions for high income for some geographic regions of the state, including North Texas. In Collin, Dallas, Delta, Denton, Ellis, Hunt, Kaufman and Rockwall counties, the limits are $80,650 for a family up to four members and $106,450 for a family up to eight. In Johnson, Parker, and Tarrant counties the limits are $79,550 and $105,000, respectively. Wise County the limit is $77,250 and $101,950. Again, not all of the counties have communities that are eligible for the loan program. For the latest on income and property eligibility, click here.

            While there is no maximum purchase price, per se, qualifying ratios, credit scores, stable and dependable income, and other criteria determine the top amount the applicant can borrow. In general, lenders are looking for a credit score of 620-640 and the housing cost should be no more than 29 percent of the applicant’s income while the applicant’s total debt should be no more than 41 percent of their income.

            My friend also expressed concern that she’d owned a house before and that would make her ineligible. No worries, I told her. The program isn’t limited to first-time home buyers.

            For now, my girlfriend is marking time until her lease is up, but by the time the next school year rolls around, I’m confident we’ll have her tucked into a new home of her own.

           

            Ready for a home of your own? I’m here to help! I know of many wonderful subdivisions in areas that are eligible for this program! And I can refer you to mortgage professionals who can guide through the loan process. Want to know more? Drop me a email now.