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USDA mortgage FAQs graphic with FAQs letters on blocksUSDA home loans are a popular choice among first time home buyers and repeat home buyers alike – and for good reason. They offer a variety of benefits, including competitive rates, flexible qualification standards, and the option for 100% financing in some cases. 

But although they are so popular, many home buyers don’t know all the details about USDA mortgages as they’re approaching the home financing process. As a result, some home buyers don’t initially realize a USDA home loan is a financing option they should strongly consider. 

USDA Mortgage Frequently Asked Questions & Answers

Curious about USDA mortgages? Here, our team of mortgage experts will share and answer some of the most frequently asked questions we hear about USDA home loans. 

What Are The Main Benefits of Financing a Home Purchase with a USDA Loan?

There are a handful of significant advantages associated with USDA home loans, including: 

  • 100% financing available
  • Competitive interest rates
  • Flexible credit score requirements
  • Low monthly mortgage insurance
  • Refundable closing costs
  • More seller’s concession

Find more details about the benefits of financing your home purchase with a USDA mortgage here.

What Are The Eligibility Requirements for a USDA Loan?

There are quite a few qualification standards you (and the property you’re purchasing) will have to satisfy in order to meet the requirements for a USDA mortgage.

We cover five main things to consider when trying to determine whether or not you’ll qualify for a USDA home loan here.

You can find additional details about eligibility requirements for New York State USDA home loans here.

What is Considered “Rural” By The USDA in Terms of USDA Mortgages?

If considering a USDA home loan, it’s important to remember that what you interpret as rural and what the USDA actually defines as rural when it comes to qualifying for a USDA home loan may be different things. When looking for a residential home loan through the USDA, rural does not only refer to farmland or remote areas.

In fact, the areas immediately surrounding various cities and suburbs throughout New York State are actually considered rural by the USDA.

You can learn more about the specifics of the term “rural” as it pertains to USDA home loans in New York here.

Is a Down Payment Required for a USDA Mortgage?

Qualified buyers can secure 100% financing through a New York USDA loan, which means they won’t have to worry about saving up for a sizable down payment. This is one aspect of USDA loans that makes them an especially great option for first time home buyers! 

How Do I Know If The Home I Want to Buy Is USDA Eligible?

USDA loans are intended to help buyers purchase homes in rural areas – but those areas considered “rural” by the USDA may not quite align with what you consider to be rural. It’s a good idea to do some investigating to determine whether the home you’re interested in is located in a USDA-eligible location. You may be pleasantly surprised! 

If you’re shopping for a home in New York State, you’ll find that some areas of the state are USDA-eligible, while other areas are not. 

You can learn more about how to determine whether the house you’re interested in is located in a USDA-eligible area here

Do USDA Loans Have a Minimum Credit Score Requirement?

USDA home loans do not have a minimum credit score requirement per se – but your current credit history does play a large role in determining whether or not you can get credit qualified. That being said, it’s important to recognize that you do not need perfect credit to qualify for a USDA mortgage. The myth of needing a score over 700 is not true. As a result, USDA loans can be a great option for home buyers who have been actively working to improve their credit score. 

Can I Refinance a USDA Mortgage?

The short answer to this question is yes – however there are qualification requirements and specific criteria you’ll need to meet in order to do so. It’s important to note that USDA home loans do not offer cash out refinancing as an option. 

If you are a current USDA borrower, you can refinance to a new USDA home loan if you’re working with an approved lender that is able to originate a USDA loan and you’re able to meet the refinance requirements. Find all the details about refinancing into a new USDA mortgage here.

Typically, you can also refinance out of your USDA home loan if you meet the appropriate requirements as well. Learn more about general refinancing options here. 

I’m Interested in a USDA Home Loan. What Is The USDA Home Loan Process Like?

Generally, USDA home loans follow the same basic process as other types of home loans. First, you will work towards pre-qualification and pre-approval with the lender of your choosing. Next, you’ll shop for a home that meets the qualification requirements of a USDA loan. 

Once you’ve found a home you’re interested in, you’ll make an offer, negotiate and ultimately sign the purchase agreement. Then, it’s time to wait while your lender processes your loan and handles underwriting and loan approval.

Finally, you’ll close on your new home. 

Find more details about each of these steps of the USDA home loan process here.

How Long Does It Take To Secure a USDA Home Loan?

Typically, the loan process takes anywhere from 30 to 60 days to complete, though timelines vary significantly and will change based on your specific situation.

Have Additional Questions About USDA Mortgages?

We’re here for you! Our team of mortgage experts is dedicated to helping our clients find the mortgages that suit them best. We’ll help you every step of the way, from determining which home loan option is right for you to navigating the home buying process all the way through closing day! 

Get your mortgage questions answered! Give us a call at 518-782-1202 or contact us online to get the conversation started.

Interested in learning more about USDA loans as you’re researching your financing options? Be sure to check out our Guide to USDA Home Loans to find more details that can help you determine whether or not a USDA loan is the right home financing option for you.

Posted in Guide to USDA Home Loans on Monday, October 19, 2020 by Maple Tree Funding