USDA Home Loans In Arizona

What is an Arizona USDA Home Loan?

Arizona’s USDA home loan program aids low- and very-low-income applicants in acquiring good, safe, and sanitary homes in the state’s qualifying rural areas by providing payment assistance, which boosts an applicant’s repayment capabilities. This type of assistance, which is based on adjusted family income, is effectively a subsidy that lowers the mortgage payment.

Despite the rural focus of these programs, several areas on the outskirts of Arizona’s larger cities, where many affordable homes are located, are eligible for these loans. USDA loans are not limited to underdeveloped areas; they can also be obtained in suburban communities and near big cities, making them more broadly available than some assume.

Types of Arizona USDA Home Loan Programs

Multiple USDA home loan programs are available for home buyers in Arizona. 

• Section 502 Direct Loan Program

The Single Family Housing Direct Home Loan, commonly known as the Section 502 Direct Loan Program, assists qualified individuals and families in purchasing or constructing a new house. Under some conditions, the USDA also offers aid to homeowners wishing to fix their existing homes or refinance their current mortgage.

• Section 502 Guaranteed Loan Program

This initiative, which offers 100% financing, assists approved lenders in providing low- and moderate-income households with the opportunity to own adequate, modest, decent, safe, and sanitary homes as their primary residence in designated rural areas. The program offers approved lenders a 90% loan note guarantee to decrease the risk of giving 100% loans to qualifying rural homeowners, which means no money down for eligible people.

• Section 504 Home Repair Program

This program offers low-income homeowners loans to repair, remodel, or upgrade their homes and subsidies to elderly low-income households to reduce health and safety hazards.

• Rural Housing Site Loans Program

The Rural Housing Site Loans program offers two types of loans to low- and moderate-income families to purchase and develop home sites.

• Section 523 Loan

Section 523 loans are only used to acquire and develop land for Self-Help house construction.

• Section 524 Loan

Section 524 loans are granted to acquire and develop land for low- and moderate-income people, with no restrictions on building methods.

USDA Home Loan Eligibility Requirements

To be eligible for USDA loans, applicants must meet specific guidelines. The eligibility requirements for USDA home loans in Arizona are as follows:

• Credit

While the USDA does not have a defined minimum credit score requirement, most lenders prefer a credit score of 640 or at least 620, and lower scores could require additional requirements for approval.

• Income 

Applicants for USDA loans must typically satisfy varying income requirements, depending on the program and region. For instance, Single Family Housing Guaranteed Loan Program applicants cannot earn more than 115% of the area’s median household income. 

Borrowers must have a stable and dependable income. In Arizona, the average household income limit for qualifying for a family of 1-4 is $103,500, while for families of 5 or more, the maximum can be as high as $136,600.

• Location

The property to be purchased, constructed, or renovated must be located in a USDA-approved rural area.

• Property Use

The home purchased, constructed, or renovated with a USDA loan must be the applicant’s primary residence.

• Program-specific Requirements

Additional requirements may apply depending on the USDA program. For example, the Section 504 Home Repair program offers low-income homeowners loans to repair, remodel, or modernize their houses and subsidies to senior low-income homeowners to alleviate health and safety hazards.

• Residency

Applicants must be U.S. citizens or lawfully admitted resident aliens.

Apply for a USDA Home Loan in Arizona

Capital Home Mortgage, a direct lender in Arizona, provides several benefits when securing a USDA home loan. We offer competitive interest rates, flexible credit underwriting, superior customer service, and faster loan processing. As a direct lender, we have the knowledge and expertise in the local real estate market and loan programs.

Call our Arizona USDA Loan Specialists today at (480) 360-6650 and get started on your path to homeownership!