Are you exploring your options for a home loan and wondering if a USDA loan might be a viable path for you? There can be a few nuances to understanding this type of loan, and it’s essential to dispel some common myths and misconceptions.

Can I Make Too Much Money for a USDA Loan?

Yes, it’s entirely possible for a borrower not to qualify for a USDA loan due to exceeding the program’s allowed income. USDA loans come with income limitations that are set on a county-by-county basis. When you provide your accurate income details to your loan officer, they’ll check your income against these limits while determining which program is the best fit for you.

Can I Include Closing Costs in the USDA Loan Amount?

Yes, but there’s a significant condition. You can include the closing costs in your loan amount only if the home appraises for more than the purchase price. In such cases, USDA allows the loan amount to be capped at the appraised value. If the home does not appraise for more than the purchase price, the closing costs must be paid by either the borrower or the seller at closing.

What Makes USDA Loans Appealing?

One of the most appealing aspects of USDA loans is that they allow 100% of the purchase price to be financed, meaning no down payment is needed! This feature can be a tremendous advantage for borrowers who may not have the ready funds for a significant down payment.

Can I Use a USDA Loan in Metro Areas?

Generally, USDA loans are not available for properties in metropolitan areas. USDA lending is primarily targeted towards rural or semi-rural areas. Cities with populations exceeding 20,000 – 35,000 are generally outside the USDA lending area. When house hunting, and if you’re considering a USDA loan, make sure to check with your loan officer that the areas you’re interested in are indeed eligible for USDA financing.

Understanding the intricacies of USDA loans can help you make an informed decision about whether this type of loan is right for you. While the income limitations and geographical restrictions may be a hurdle for some, the no down payment feature and the possibility of rolling in closing costs make USDA loans an attractive option for many borrowers. Always consult with a professional loan officer to fully understand your options and to make the best choice for your unique circumstances.

With a USDA loan, your dream of owning a home could be closer than you think, and our expert team is here to guide you every step of the way. Reach out to us today and let’s explore how we can turn your dream into a reality!