The USDA, also known as the United States Department of Agriculture, helps families around the country and in the state of Utah get into low-cost insured homes. USDA Home Loans are also called Rural Housing Loans. These loans are not just for farmers, there are many other people that can qualify.
These loans are available to eligible people living in Utah that are not living in major metropolitan areas or are living in a city with less than 25,000 people. If you have questions you can also check the USDA loan eligibility map.
Because these are government backed loans, people who are interested in taking out a Utah Rural Housing Loan do not have to put any money down, also known as a 100% financed home loan.
Benefits of Rural Housing Loans
- Low closing costs.
- The seller can pay your closing costs.
- Fixed interest rates.
- No loan limit.
- No mortgage insurance added to the payment.
- USDA loans are always a fixed rate loan so applicants can have peace of mind that their monthly payments will always be the same.
- There are two types of USDA loans available in some areas of Utah now. These loans can be taken out on various properties including condominiums, single family homes, mobile homes, and homes that are part of a development.
Common Types of USDA Loans
Guaranteed Rural Housing Loans
The most common type of USDA loan in the state of Utah is the Guaranteed Rural Housing loan. The Guaranteed loan permits those with higher incomes to get financing as well as take advantage of 100% financing. Applicants for this loan may earn up to 115% of what other residents are earning on the average. There are income limits on USDA loans, and your mortgage expert at Fink and McGregor will go over those with you at the time you submit your loan application.
Direct Rural Housing Loans
Direct Rural Housing loans are not granted as frequently as Guaranteed Rural loans. The guidelines for the Direct Rural loans are designed for lower-income families. The guidelines permit those families interested in purchasing a home, to be at 50% of the median income for families in that region. Additionally, there are income limits for the Direct Rural loans as well.
Utah Rural Housing Loan Requirements?
There are still eligibility requirements in place for those who wish to apply for a USDA loan in the state of Utah. The borrower’s monthly mortgage payment, including the taxes, insurance, principle, and interest can be no more than 29% of the borrower’s gross monthly income.
The lender will include all other outgoing monthly debts to determine where the borrower’s debt to income ratio falls. The lender usually requires that a borrower’s debt to income ratio be no more than 41% with everything included. This means not only your mortgage payment, but also your car payment, credit cards, and any other debt that appears on your credit report. Much like FHA, who has a commonsense underwriting approach, USDA takes a similar stance. Should someone’s debt to income ratio not work, then there are other considerations that can be made which USDA refers to as “compensating factors”.
These factors mean taking a closer look at what a borrower might have in their savings account in a bank, or that a borrower has paid utility bills on time.
Credit is checked, and most lenders require a 620 or better credit score in order to get approved for a USDA housing loan.
While there is no set loan amount for USDA loans, the debt to income ratio will help determine how much borrowers can take out. The USDA loan program was designed to encourage home ownership for everyone.
Even though a USDA rural housing loan can be used for new construction, existing homes, and even foreclosures, the property must be the buyer’s primary residence.
How to get started with a Rural Housing Loan?
You can get started right away by either filling out our quick application or give us a call at 801-264-9494.