USDA loans

USDA Home Loans

USDA home loans requires no money down and closing costs can be paid by the seller making USDA home loans a great alternative to FHA financing. The program is available for properties considered to be in a rural area in California.  (click here for link to eligible areas). There are many benefits to USDA Home Loans which buyers should be aware of while considering their financing options.

The USDA home loan is a true zero down payment program.  In addition,  USDA home loans have no mortgage insurance which can result in substantial savings when comparing USDA home loans to FHA home loans:

USDA vs FHA $250,000 Sales price

30 Year Fixed 4.25%

USDA FHA
Down payment $0
Loan amount $250,000 $241,250
Funding Fee/UFMIP $5000 $2412
Total Loan $255,000 $243,662
Principal and Interest $1254.45 $1198.67
Monthly Mortgage Ins $0 $233.51
Property Taxes $260.42 $260.42
Property Insurance $65 $65
Total payment $1524.09 $1757.60


 Another benefit to the USDA home loans is that it allows for closing costs to be paid in two different ways.  The easiest way is to have the seller pay the closing costs.  USDA home loans allow for the seller to pay up to 6% of the sales price towards closing costs.  There is another way to pay closing costs. If the appraisal on the property comes in higher than the sales price, then you can finance them into the loan amount.  Either way is acceptable but in today’s market, having the seller pay for closing costs is not uncommon.

Some other key features of  USDA home loans are as follows.

  • You do NOT need to be a first time home buyer.
  • There are no sales price or loan limits when considering a property.  Although certain properties are not allowed such as one’s with second structures such as barns or granny flats.  However, the program requires each property to be in a rural area.  It is best to contact me to see if the property that you are considering is in a qualified area.

One caveat to USDA home loans is that it does have very specific income limits base upon family size for each county.  However, the income limits are fairly high and generally do not limit one’s ability to purchase.  For USDA home loans in California, contact me directly via email for income limits.

If you are considering purchasing a home consider USDA home loans in California.  Contact me directly so we can review  your qualifications and USDA home loans in greater detail. I’m sure that you will agree that this is a great program for those of you considering purchasing in a rural area.

USDA

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