USDA Home Loans
Learning More About USDA Home Loans In Texas
What is a USDA Loan?
Primarily, USDA Guaranteed Rural Housing Loans are made to support rural land growth and development. Initially, USDA Home Loans were thought of as only for farmers. However, in recent years, the program has been expanded to help families without sufficient home financing opportunities to buy a home in a rural area.
Typically, a USDA Home loan in Texas is a 30-year mortgage and has an interest rate that’s determined by the lender. No down payment is needed, 100% financing is available, and these distinguish these loans from other traditional home loans.
What are some of the benefits of a USDA Home Loans in Texas?
In general, USDA loans provide a few unique benefits that distinguish them from standard home loans. Since USDA loans need no down payment, qualified individuals can fund up to 100% of the total purchase of that home, allowing them to save lots of dollars in down payment costs. As a result, these loans have become one of the more attractive loans available to most homeowners in Texas. Here is a list of other benefits:
- Better terms than conventional or FHA loans
- Great rates
- Reduced monthly mortgage insurance
- Low credit score options
- You can get closing cost payment from any source
- Zero down payment needed
- Not limited to any first time homebuyer
- Easy qualification criteria
Three major factors determine the eligibility of a USDA Loan:
Credit Worthiness. Once an underwriter reviews your credit on a particular USDA loan, the main thing they will be searching for is a history of paying your bills in time.
Property Location. If you want to get approved for a USDA loan, then your home should be found in a designated USDA rural area. If you want to find out the USDA eligibility of your particular county, a Financing USDA loan consultant can do it for you, or you can check it online.
Income. If you want to apply for a USDA loan, you will need to document your income. Generally, USDA will need to see a two-year history of consistent income or employment. Dependents, county, and expenses determine the income limits.
Who are the Eligible Borrowers?
- U.S. citizens
- Non-permanent resident areas
- Permanent resident areas
- Married borrowers who are applying without their spouse (or non-purchasing spouse)
- To determine whether a household is income-eligible, the income of the non-purchasing spouse should be verified and added in the household income calculation. However, the incomes of the non-purchasing spouse must not be counted toward qualifying income or repayment.
- The non-purchasing spouse’s credit is not considered as a reason to decline a loan application. Although the non-purchasing spouse won’t sign the note, they will need to sign the security instrument
Who are the Ineligible Borrowers?
- One-unit attached or detached properties
- Modular homes
- development (PUDs)
What are the Income Limits of USDA Home Loans in Texas?
Income used for primary purposes of deciding the eligibility for the GRH program is known as adjusted annual income. Generally, it’s an estimate of the annual income that every adult member of the household will receive over the next 1-2 months. It is worth noting that adjusted annual income isn’t similar to repayment income. The latter includes just the income from loan applicants that should be determined by the underwriter to be dependable and stable.
Adjusted annual income, annual income, and repayment income must all be determined by applying the Request for Single Family Housing Loan Guarantee. Adjusted annual income might not exceed 115% of the overall median income for that area in which the specific property is located. Here, the income limits are published at 115% of the actual median income and can’t be exceeded. For purposes of determining if adjusted annual income complies with the income limits, tax-exempt income is added. However, it is not grossed up.
For USDA Home Loans in Texas, the average household income limits are $86,850. Also, the household limits vary depending on the number of occupants in the home. If there are 5 or more occupants, the limit could be as high as $143,300.
What is the Maximum Loan Amount Purchase in Texas?
The maximum base loan amount is generally determined by the loan limit or the qualifying ratios and appraised value. But the gross loan might exceed the appraised value just by the amount of the specified financed Guarantee Fee.
What About Refinance?
Streamlined refinances. Here, the refinance loan amount might include the outstanding principal balance of the existing GRH loan as well as any amount of the actual upfront guarantee fee that needs to be financed into the loan. Also, the new loan can’t exceed the initial purchase loan amount and can’t include closing costs, delinquent interest, prepaid expenses, or lender fees.
Non-streamlined refinances. In this case, the new loan amount might include the interest and principal of the existing RD loan, closing costs, lender fees, and prepaid expenses, to the extent there is enough equity in the property, as confirmed by the new appraisal. Also, the guarantee fee might still be financed regardless if the resulting gross loan amount exceeds the appraised value.