USDA Home Loans In El Paso

What is a USDA Home Loan?

A USDA house loan is a mortgage with no down payment for qualifying rural borrowers. The United States Department of Agriculture issues USDA loans through the USDA loan program, often known as the USDA Rural Development Housing Loan Program.

Two USDA Home Loans are available in Texas: (a) Direct and (b) Guaranteed.

• Direct Loans – 

These mortgages are for applicants from low and very-low-income households. The maximum household income under this program varies by region. 

Also known as the Section 502 Direct Loan Program, it helps low and very-low-income applicants get good, safe, and sanitary housing in qualifying rural areas by increasing their ability to repay loans. Payment assistance is a sort of subsidy that temporarily cuts the mortgage payment. The amount of assistance is determined by the adjusted household income.

• Guaranteed Loans –

Like an FHA loan and a VA-backed loan, the USDA insures a mortgage provided by a participating local lender, enabling you to get low-interest rates on mortgages without a down payment. However, no money down will require a mortgage insurance premium similar to an FHA loan. 

100% financing is available to eligible applicants for purchasing, construction, rehabilitation, improvement, or relocation of a home in an approved rural area. The program gives a 90% loan note guarantee to approved lenders to reduce the risk of granting 100% loans to qualifying rural homebuyers — meaning there is no down payment required!

Eligibility Requirements for USDA Loans

USDA home loans are the most stringent and challenging to get and qualify for due to their 100% financing nature. There’s an income limit to qualify for a USDA home loan, both Direct and Guaranteed.

• Credit – Applicants with a credit score of 640 and above will get streamlined processing. However, borrowers with scores below 640 must meet more stringent underwriting standards. Those without a credit score or limited credit history may qualify by providing “nontraditional” credit references, such as rental and utility payment records.
• Income – You can find the income threshold to qualify for a Direct loan here, whereas the income eligibility requirements for a Guaranteed loan can be found on this page.

Various things are evaluated when establishing an applicant’s eligibility for Single Family Direct Home Loans. Applicants seeking a direct loan must have an adjusted income at or below the statutory low-income limit for the area where they intend to purchase a home and demonstrate a willingness and capacity to repay debt.

Candidates must:

• Not have access to secure, sanitary housing;
• Not being able to secure a loan from other sources on terms and conditions that can be expected to be satisfied;
• Must use the residence as your primary residence;
• Possess the legal authority to incur debt;
• Meet citizenship or noncitizen eligibility requirements;
• Not be banned or excluded from federal program participation.

Properties financed with direct loan money must meet the following requirements:

• Typically be less than 2,000 square feet;
• Not have a market value that exceeds the area’s maximum borrowing limit;
• Not be intended for profit-generating operations;
• When the title to the property is transferred or the borrower no longer resides in residence, the borrower must refund all or a portion of the payment subsidies received throughout the life of the loan.

Apply for a USDA Loan in El Paso

Capital Home Mortgage is a direct lender and servicer in Texas. Our USDA Home Loan Specialists can assist you in your home loan needs. Call us at (915) 283-3949 to see if you qualify for a USDA home loan in El Paso.