Usda Loan Questions

Confused emoticonHere is a collection of the most frequently asked questions for USDA home loans:

Q. Are gift funds allowed on USDA loans?
A. Yes. See Gift funds

Q. Are USDA loans 0 down?
A. It's hard to believe, but USDA home loans are 0 down.

Q. Can a USDA loan be used for a mobile home
A. Yes. See USDA Loans for Manufactured Homes

Q. Can a USDA loan be used to build a home?
A. Yes. See New Construction

Q. Can you buy a manufactured home with a USDA loan?
A. Yes.

Q. Does a modular homes qualify for USDA loan?
A. Modular homes are viewed as new construction, and are eligible if the modular home meets the USDA, state and local new construction requirements.

Q. Does a USDA loan cover closing costs?
A. Closing fees and prepaid expenditures such as real estate taxes and homeowner's insurance are not covered by the USDA.

Q. Does a USDA loan have PMI?
A. USDA loans do not have private mortgage insurance (PMI), but they do require an annual fee that is collected monthly. See Does a USDA Loan Have PMI

Q. How long does it take to get a USDA loan?
A. USDA home loans might take up to 60 days to process. If the applicant's paperwork are in order and the appraisal and title search are completed promptly, the time frame may be shortened to 30 to 45 days. The time frame for a USDA loan is similar to other mortgages (i.e. conventional, FHA and VA).

Q. How soon after Chapter 7 can I get a USDA loan?
A. In general, a three year waiting period is required, however, the waiting period can be shorter. Regardless of the waiting period, the borrower must have reestablished his or her credit. See Bankruptcy

Q. Is a USDA loan better than a FHA loan?
A. The USDA guidelines parallel the FHA underwriting rules. The fee structure for a USDA loan is less than the FHA mortgage. For example, the FHA and USDA loan programs require a funding fee. The FHA funding fee is 1.75%. The USDA guarantee fee is 1%. Both fees are charged to the home buyer to support the loan programs.

In addition to the funding fees, both programs require a monthly service cost. The FHA monthly MIP/PMI can vary from .80% to 1.05% of the loan amount. The monthly fee is based on the loan term and loan amount.

The USDA only requires a .35% monthly MIP/PMI cost. The USDA does not adjust the monthly based on loan amount or term.

USDA do not require a down payment. The FHA home loan requires a 3.5% minimum down payment.

Assuming the borrower(s) meet the area and income requirements a USDA is better option.

Q. Is USDA loan only for first time buyers?
A. The USDA home loan are available to first time home buyers and repeat home buyers alike.

Q. What disqualifies you for a USDA loan?
A. Delinquent federal debt will disqualify an applicant.

Q. What does USDA loan stand for?
A. United States Department of Agriculture

Q. What is the income limit for USDA loans?
A. See the USDA income and area lookup tool