The USDA Guaranteed Home Loan Program in Garfield is backed by the USDA – the United States Department of Agriculture.
It is a TRUE no money down home loan in Garfield. Many people who take advantage of this program are able to get into their homes with little to no money out of their pocket.
BUT, there are several USDA Loan eligibility requirements in Garfield that you need to meet in order to take advantage of this home loan program.
USDA Loans in NJ Requirements Explained:
The first requirement is that you cannot be a current homeowner.
If you already own your home but are planning to sell it, then you are still eligible in Garfield! You just need to have your existing home soldBEFORE we can close the loan for your new home.
The next requirement is that your total annual household income cannot exceed the limits set by the USDA.
These income limits are based on market area and family size.
Another requirement is that you cannot have defaulted on a USDA loan in the past.
This means that if you’ve had a past USDA loan that has gone in to foreclosure, you unfortunately aren’t eligible.
How to take advantage of USDA Loans in NJ:
To take advantage of this program, the home has to be located in an eligible rural area.
But guess what, rural does not necessarily equal country! Homes do not have to be in a country setting.
In fact, there are many areas where entire counties and cities qualify for this program. The property has to meet minimum USDA Loan property standards.
The home must be in satisfactory condition, and this loan cannot be used to finance any sort of income producing property.
That means mini farms, and properties with farm acreage are not USDA Loans eligible.
2019 USDA Loan Eligible Areas in NJ: Map to Eligibility
Hi this is Scott Hastings with Mortgages byScott, powered by On Q Financial. You might wonder why I'm standing in the middleof a field and that's a good question. The reason is I'm talking about USDA loanstoday. Although this looks like a very rural areaI'm only really about a mile and a half from downtown Davidson. A lot of people wouldn't think that Davidsonwould have any areas that are USDA eligible but there really are. A lot of people give me a all looking fora loan where they don't have to put any money down and there's no mortgage insurance, andthat is a USDA loan. USDA loans are great, the only thing is thatthey are not eligible for all borrowers because of income requirements or caps on householdincome, and they are not available on all properties. The income requirement is going to be basedon the number of people that live in the house, not just the number of people on the loan. Most loans are going to go by who is on theloan, so in this case if you have 3 people who live in the house, but only 1 person isgoing to be on the mortgage, the income is only going to be considered, as far as qualifyingfor the loan itself, by the person who's on the loan. But USDA is going to count the number of peoplewho live in the household. So if a husband and wife both work, but onlythe husband is on the loan, and if their income together is less than the maximum householdincome limit for that USDA area then they are good to go. But if together their income exceeds the maximumincome limit for that area then unfortunately they wouldn't qualify. Also not every home is going to be eligiblefor a USDA loan. And there's not really a map where you canjust look at it and say "Oh that whole area is USDA eligible". You have to go to the USDA website and youcan put in the address of the property and it will tell you whether it's a USDA eligibleproperty. You can also go in there and type in the amountof monthly income the borrower has and see if that household income exceeds the maximumincome requirement. There are some tips and tricks on gettingqualified for a USDA loan where you might not think that you would normally be eligible. One is a mortgage credit certificate and certainthings like that so if you have any questions at all about a USDA loan please give me acall.
So Steve, What are the requirements for the USDA program? So USDA has a few interesting requirements First of all, you'll need to have at least a 580 credit score Some lenders require a 620 credit score Your household income has to be under the county maximum Like a lot of down payment assistance programs This is based on family size So 1 to 4 is one category and then 5 and above is a higher threshold for qualifying What's unique about this one is the home has to be within a designated area. So, Typically what that means is. NOT within a metropolitan area So within our area here (Riverside county) Our local cities around her don't qualify But we only need to go 10 miles away to where there's an open area where there's Several homes that qualify. USDA stands for United States Dept of Agriculture But it's NOT a farm loan. Specifically, they don't finance this program for farms. It has to be a Single Family home without a barn structure on the property. and then it also has some home price limitations. The Threshold is a little bit lower than say an FHA loan for the loan limits. Ok, and how does this program differ from other Down payment programs? So it's different because it's not really a down payment program but it allows financing up to a 100% of the purchase price And it's interesting because you can actually use this program with 1 or 2 of the other programs. If you need closing cost assistance But, what's unique it's a 100% Financing So you don't need a 2nd or a 3rd lien on the property. Your interest rates are typically lower Than if you combine it with a down payment assistance programs And you don't have to repay any down payment assistance It has a monthly factor It's like mortgage insurance upfront It's financed at a monthly component Much less than FHA So if you can qualify for this program It's better than FHA And As I mentioned, rates and payments Are typically lower on this program So USDA is really a great program. Great! And on average How much does the home buyer have to come in with out-of-pocket? So Again, we are financing the whole loan Purchase price up to 100% So the only thing remaining is then the closing costs Typically, plan on around 3% of the purchase price for funds to close. The question there then becomes, Well, Where does that come from? Typically, we ask the seller to cover those costs And if we can get the seller to cover 3% Then, the buyer may only need to come in with an earnest money deposit. And they may even get most or all of that back. If the seller is covering all the fees. One unique feature about USDA Versus all other loans is that if the home appraises for more than the purchase price We can finance the closing costs Up to that appraised amount So, no other loan I know that we can actually finance the closing costs. on that type of loan What type of home buyer is this program ideal for? So certainly those that don't have access to money for a down payment Anyone that wants to live that doesn't have to live within a metropolitan area because, again, the house has to be in an area that is not in a high densely populated area It's also suited well for people who have some credit issues and anybody that qualifies for this program would definitely be better served than going FHA so those type of people. And besides the Area restrictions are their any other property restrictions? So property restrictions are going to be similar to FHA They'll do manufactured homes They'll do homes with Casitas So no real other restrictions. Just if it conforms to the FHA guides then it should qualify for USDA There's a couple little quirky things That you don't run into very often Like you can't actually have a barn on the property It definitely can't be for agricultural purposes It has to be for residential purposes Ok Great! Thanks Steve.
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