USDA loans are insured by the United States Department of Agriculture. If you are buying in a rural designated area, USDA loans remain the best loan program available next to VA home loans. There are income restrictions and the property has to be in a designated area for it to qualify for USDA financing, but it is a great loan program for the properties and individuals that qualify.
You can see if your property qualifies by going here: Often the system cannot tell you whether or not a property is in a designated area, and then you have to look at where the property boundaries sit and determine whether or not the property is qualified.
Here is an overview of the USDA loan characteristics:
MAX LOAN AMOUNT:
Depends on your county (See Limits Here)
UPFRONT GUARANTY FEE:
2% of the base loan amount (can be financed)
MONTHLY GUARANTY FEE:
4% (calculated annually)
Below is a summary of the waiting periods USDA requires for most major derogatory credit events:
DERROGATORY CREDIT ITEMS:
No late payments in the last 12 months
BANKRUPTCY CHAPTER 7:
3 year waiting period from the date of discharge. An explanation is required.
BANKRUPTCY CHAPTER 13:
Must be completed and there has to be a 12 month satisfactory payment history following the completion of the Chapter 13.
3 year waiting period from the date of sale. An explanation is required.
3 year waiting period from the public trustee’s certificate of purchase. An explanation is required.