Texas USDA Home Loan – USDA Rural Development

What is a USDA Loan?
USDA Guaranteed Rural Housing Loans are designed to encourage rural land development and growth in rural areas. USDA Loans were long thought of as just for farmers, but the program has been expanded in recent years to help families without adequate home financing opportunities purchase a home in a rural area.

A USDA Guaranteed Rural Housing Loan is a 30 year mortgage, with an interest rate determined by the lender. 100% financing is available, no down payment is required, which sets these loans apart from more traditional home loans.

What are the Benefits of a USDA Loan?
USDA loans offer several unique benefits that set them apart from standard home loans. USDA loans require no down payment, so qualified individuals can finance up to 100% of the home’s total purchase price allowing them to save thousands of dollars in down payment costs. This makes them one of the more desirable loans available to homeowners in Texas.

Other benefits include:

  • Great rates
  • Better terms than FHA or conventional loans
  • Low credit score options
  • Reduced monthly mortgage insurance
  • Zero down payment required
  • Closing cost payment can come from any source
  • Easy qualification criteria
  • Not limited to first time homebuyers

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ELIGIBLE BORROWERS

  • United States citizens
  • Permanent resident aliens
  • Non-permanent resident aliens
  • Married borrowers applying without their spouse (non-purchasing spouse)
  • Income of non-purchasing spouse must be verified and included in the household income calculation to determine if household is income eligible. However, the non-purchasing spouse’s income will not be counted toward repayment/qualifying income.
  • Credit of the non-purchasing spouse is not considered a reason to deny a loan application. The non-purchasing spouse will not sign the note, but will sign the security instrument.

INELIGIBLE BORROWERS

  • Non-occupant co-borrowers
  • Borrowers closing in a trust

ELIGIBLE PROPERTY TYPES

  • One-unit detached or attached properties
  • Condominiums
  • Planned unit development (PUDs)
  • Modular homes

INCOME LIMITS

  • Income used for purposes of determining eligibility for the GRH program is referred to as adjusted annual income, and it is an estimate of the annual income to be received by all adult members of the household over the next 12 months; adjusted annual income is not the same as repayment income, which includes only income from the loan applicants and which must be determined by the underwriter to be stable and dependable
  • Annual income, adjusted annual income and repayment income will all be determined by using the Request for Single Family Housing Loan Guarantee, Form RD 3555-21 including the Worksheet Documenting Eligible Household and Repayment Income, which is included as pages three through five
  • Adjusted annual income may not exceed 115% of the median income for the area in which the subject property is located; the income limits published here are calculated at 115% of the median income and cannot be exceeded
  • Tax exempt income is included for purposes of determining whether adjusted annual income conforms to the income limits, but it is not grossed up.

MAXIMUM LOAN AMOUNT PURCHASE
The maximum base loan amount is determined by qualifying ratios and appraised value or the loan limit, whichever is less. The gross loan amount may exceed the appraised value only by the amount of the financed Guarantee Fee.

REFINANCE
Non-streamlined refinances: The new loan amount may include the principal and interest of the existing RD loan, closing costs, prepaid expenses, and lender fees to the extent there is sufficient equity in the property, as determined by the new appraisal. The guarantee fee may still be financed even if the resulting gross loan amount would exceed the appraised value.

Streamlined refinances: The refinance loan amount may represent the outstanding principal balance (including current interest charges due along with a reasonable and customary fee for reconveyance) of the existing GRH loan and any amount of the upfront guarantee fee to be financed into the loan. The new loan amount cannot exceed the original purchase loan amount and cannot include delinquent interest, closing costs, prepaid expenses, or lender fees. The guarantee fee can be included in the loan amount, but only to the extent that the gross loan amount does not exceed the original purchase loan amount of the existing loan to be refinanced. (Streamlined-Assist transactions are not eligible under this product. Use the GRH Streamlined-Assist product instead.)

For more information about USDA loans, their benefits and loan options and how it may apply to you, please contact us direct at 281-627-4222 or submit the quick quote form on this page.