USDA Rural Development
A best-kept secret for Oklahoma home buyers
Don’t be misled by the word rural, approximately 97% of the United States is eligible for USDA financing, representing 109 million people. This equals about one-third of the U.S. population. It's very likely that a property near you qualifies. The USDA home loan is a 100% financing (zero down payment) mortgage offered by the U.S Department of Agriculture to home buyers in the less densely populated cities, towns, and communities of Oklahoma. Borrower eligibility for this great program is determined by home location, income level, and credit requirements. A USDA Rural Development loan is insured by the U.S. Department of Agriculture and issued by a USDA Rural Development participating local lender like Scissortail Financial Home Loans. This government guaranteed loan allows more flexible and lenient qualifying guidelines with benefits for home buyers looking to purchase in eligible areas. The USDA Rural Development loan asks for no down payment, requires reduced mortgage insurance, and allows for flexible guidelines for qualification among its many other advantages.
Not sure if you qualify? Want to compare a USDA Rural Development loan to other programs to be sure you are getting the perfect loan? Our loan advisors at Scissortail Financial Home Loans can go over the USDA Rural Development guidelines so you can rest easy knowing that the USDA Rural Development loan is the best loan to use for your home purchase.
- No down payment 100% financing available
- Reduced mortgage insurance requirement
- Flexible credit guidelines with low minimum credit scores
- Closing costs can be financed into the transaction
- Competitive fixed interest rates
Qualifying for a USDA Rural Development loan
Scissortail Financial will verify USDA rural development loan eligibility using the same methods as any other mortgage program. Your credit, income, employment, and asset information will be compared to current guidelines for USDA loans. You do not need to be a first-time home buyer. However, you may not own an adequate, livable property reasonably close to where you are purchasing a home using the Rural Development loan. There are no stated mortgage limits for USDA loans. Rather, your income as a borrower determines the maximum loan size. USDA requires an income of 115% or less of your region’s median income. For example, in the state of Oklahoma after defining the area median income, your household income could be up to $103,500 if you have 4 or less people living in the household. Increased limits are available to households of five or more who receive an income limit of $136,600. Just a reminder that the USDA will count your entire household income toward these limits. For instance, if you have a working child living in the home, the lender would factor their income into household income totals, even if they are not on the loan.
Great for home buyers
It can take someone years to save up the down payment of 3.5% for a FHA loan or 5% to 20% for Conventional financing. During that time, home prices can go up, which makes saving a down payment even harder. With the USDA Rural Development loan, home buyers can purchase immediately and take advantage of increasing home values. The USDA Rural Development loan does not require a down payment which helps you buy a home with less cash compared to many other loans. Home buyers purchasing their first homes can qualify for more house thanks to lower interest rates and reduced monthly mortgage insurance.
Unique USDA Rural Development loan refinance option
This program now allows an excellent refinance option for Rural Development Loan borrowers with and unlimited-LTV refinance. In many cases an appraisal is not required. The underwriting process is quick and the qualifying guidelines are easy with the intent to allow Rural Development loan borrowers to take advantage of interest rate improvements when they occur. Also called the USDA Streamlined-Assist Refinance, this program's qualifying hurdles are minimal, but the USDA does enforce a few eligibility standards for their refinance program:
- Your payment must decrease by at least $50 per month after the refinance
- The home you're refinancing must be your primary residence
- Your existing mortgage that you will be paying off must be a USDA Home Loan
- Prior to applying, you must have made 12 consecutive on-time payments
You also don't need to income qualify. Current income documentation is only collected to ensure you are still within USDA income eligibility limits. Most credit scores are accepted into the USDA streamline refinance program, and a home's loan-to-value is not a consideration. Underwater homeowners can use the program as easily as a homeowner with 20% equity can.
In special situations such as removing an ex-spouse from the existing note or if the payment is not being reduced by $50 per month, the USDA can allow a refinance to occur with additional documentation.
In most cases, this loan even allows you to include settlement costs, and escrow reserves into the new loan amount. That helps homeowners receive a no out-of-pocket refinance for which no cash is needed up front. Take advantage of today’s low rates before they go up further with a USDA Rural Development refinance to reduce your rate and pay your loan off quicker.
USDA Rural Development home loans have no prepayment penalty
A USDA Rural Development loan won't restrict your right to sell your home if you decide you no longer want to own it. There’s no prepayment penalty no matter when you decide to sell your home, pay off your loan with a refinance, or completely pay off the existing loan balance with your personal funds.
Easy to qualify for a USDA Rural Development home loan
Like all mortgage types, USDA Rural Development loans require specific documentation, an acceptable credit history and sufficient income to make your monthly payments. But, as compared to other loan programs, USDA Rural Development loan guidelines tend to be more flexible. This is made possible because of the USDA Rural Development loan guaranty. The United States Department of Agriculture genuinely wants to make it easier for you to buy a home or refinance.
The USDA Rural Development offers funding fee flexibility
USDA Rural Development loans require a "funding fee", an upfront cost based on your loan amount. Funding fees don't need to be paid as cash, though. The USDA Rural Development allows it to be financed with the loan, so you do not need to bring it to closing with your personal funds.
It’s important to know your USDA Rural Development loan benefits. The USDA Rural Development loan is worth a serious look when you are comparing other financing types for a home loan. You can talk with a Scissortail Financial USDA Rural Development loan specialist about what might be possible at 918-495-3773.