The USDA Loan Program

13 Aug

USDA-RD_web

The first time I heard someone mention a USDA loan, it threw me for a loop. I thought about it for a second, and the only inference I could make is that the USDA is the government regulatory agency for farmers. So, I assumed it was a loan program just for farmers and acreage. I was wrong.  Actually, the USDA loan program is one designed to stimulate the development in “rural” areas, but it’s open to anyone who wants to buy a single family home.

By definition, the USDA loan is a government insured loan program that is designed to make qualifying areas more affordable. In relation to Savannah, anything in Chatham or Effingham County, so long as it’s West of I-95, qualifies.  Stop and think about that folks. That means that a huge chunk of Pooler qualifies, as well as Port Wentworth, Rincon, Guyton, and Springfield. Now that you know where you can get this loan, let’s look at some other qualifications.

  • The USDA loan is considered “100% financing“, which means you don’t have to put any money down. This has the potential to be great! In many cases, you can buy a home for less than what you pay in rent.
  • There is no mortgage insurance premium, like there would be with an FHA loan. ( This is money that is paid into escrow to insure your lender against loss or default on your loan).
  • There is no maximum loan amount. As long as your income and credit can support it, there is no cap on the amount of your loan.
  • Think your credit score is in the can and you can’t qualify? All you need is a credit score of 580 to qualify.
  • ALL USDA loans are 30 year FIXED at whatever the current market rate is.  Today is 5.26% for example.
  • You can purchase re-sell or new construction properties.
  • You may even get approved with Chapter 7 bankruptcy!

There are some downsides to the program:

  • There are income limitations. These limitations are based on your income, and number of people in the household.
  • Also, I think it’s wise to plan to stay in your home a minimum of 3-5 years. At that point, you may have enough equity in the home to move up.

Not to worry though. It’s a great opportunity for many people to purchase a home that aren’t cash friendly. Despite what the media reports, real estate is still a very sound investment, as long as you go about it the right way. Be responsible. Do some investigating. Speak to lenders and get the help of a Realtor!

http://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do

USDA Home Loans in Washington

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4 Responses to “The USDA Loan Program”

  1. Kip Vogus February 12, 2010 at 12:06 AM #

    Its nice to find rural development information. I found your blog after lots of searching on Google

    • Savvy in Savannah February 12, 2010 at 6:23 PM #

      Great!! I am glad you thought it was helpful.. it’s a great program in my local market and it has been beneficial for lots of my clients. It helps a lot of people buy a home that might have thought they couldn’t. How awesome is that?!

Trackbacks/Pingbacks

  1. Don’t worry about USDA running out of money! « S A V V Y I N S A V A N N A H - March 15, 2010

    […] USDA loan, usda out of money Awhile back I blogged about the USDA loan program. Read about it here. It’s big business in my local area and has helped tons and tons of people purchase homes […]

  2. Under Contract – 9 Springwater « S A V V Y i n S A V A N N A H - August 28, 2012

    […] house is an REO with Chase Bank and is being purchased using the USDA loan program by some very excited first-time home buyers. This property has an awesome two car garage and open […]

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