Dallas USDA Home Loans

USDA home loans are a great way to enter the housing market if you want to live in smaller cities or rural areas. They come with lower down payment requirements and are backed by the government through the U.S Department of Agriculture (USDA). 

If you’re ready to buy a home in any rural county across Dallas, Capital Home Mortgage can help you secure a USDA home loan. We’re direct mortgage lenders with several decades of combined industry experience when it comes to different types of home loans in Dallas and the surrounding areas. Speak with our loan officers today about your Dallas USDA home loan. 

Recognizing that the USDA offers two distinct types of loans is essential. The direct loan, where the USDA underwrites and provides the funding, and the guaranteed loan, which protects lenders against loss in the case of a foreclosure, are designated for buyers with meager incomes. Simply put, the USDA insures a percentage of the loan, usually related to the down payment. This guarantee enables a 100 percent mortgage loan, making homeownership more accessible in rural America.

Requirements of USDA Guaranteed Home Loan

You can get a USDA loan if you’ve got the credit, but be aware that these loans come with stricter requirements than other types of financing due to their 100% loan nature. You’ll need a higher credit score, at least 640, to qualify. Additionally, USDA loans have stringent requirements for income and area median incomes or AMI levels, which you can find challenging if you live outside these boundaries.

To qualify for a USDA loan, you must be a U.S. citizen or permanent resident, non-citizen national, or qualified alien who agrees to make the property you intend to purchase your primary residence. You must also have a household income that does not exceed 115% of the Area Median Income (AMI) and have a steady employment history.

A borrower should not only meet the above-mentioned essential requirements but must also be able to provide documentation proving their inability to get a conventional loan without mortgage insurance. Additionally, being suspended or debarred from joining federal programs results in disqualification from a USDA loan.

While it’s possible to purchase a property in any area, the United States Department of Agriculture requires borrowers to buy one from its designated areas for rural homes. These properties must exceptionally be single-family dwelling units that meet the requirements of the U.S. Housing and Development standards.

Limitations of a USDA Loan

The USDA loan is an excellent option if you want to buy a property and have decent credit. However, there are some limitations of the USDA Guaranteed Home Loan.

First, these mortgage offers only come at a 30-year fixed rate, which may be too long for some homebuyers and complicated compared to other loans available today that offer lower rates. Second, you can finance 100% of the property’s appraised value. The appraised value must justify the purchase price.

Moreover, there are limitations as to the use of your loan proceeds. You’ll need more than just good credit because the proceeds from your new home may only be used towards the following:

• purchase of essential household equipment and new or existing house as a permanent residence
• refinancing
• repairs for existing dwelling
• site preparation costs for construction

Get a USDA Home Loan in Dallas

Are you looking for a great mortgage option and wishing to live in a rural area or small city? The USDA loan is perfect for you! Let us work with you to secure the home financing for your needs. 

For more information about our Dallas home loans, please don’t hesitate to call us at (214) 372-0015.