USDA Home Loans
USDA Loans: Where Local Residents Apply for Funding
USDA home loans offer a valuable opportunity for people who would like to become homeowners, but have been unable to secure financing through a traditional mortgage lending process. It assists buyers by offering a lower interest rate with no down payment and by encouraging sellers to cover the closing costs, or part thereof, for the buyer. In addition, the USDA program guarantees the loan so the lender feels more comfortable about approving the application. To apply for this type of loan, San Antonio home buyers must apply with a local lender approved by the USDA.
Not all lenders are USDA approved. Mortgage providers who want to receive approval to offer USDA home loans must pass an extensive application approval process. In addition to undergoing a review of their past lending performance, they must prove they are able to provide funding to local borrowers and have previously worked with clients who received funding under other federally-backed mortgage programs. In addition, they must continue to meet the standards required by the USDA or their approval can be revoked at any time.
Why Local Lenders are Used
The federal government does not actually fund the loans that are provided through the USDA. The lender is the one who provides the financing while the government guarantees to cover any losses if the buyer defaults on their loan. The lender must provide the initial approval for the loan using basic USDA eligibility standards and common loan standards. If an application is accepted by the lender, the paperwork is then submitted to the USDA for approval. Just because the loan office approves the application does not mean it will also be accepted by the USDA. Most mortgage lenders also offer other loan programs, so even if the USDA does refuse the application, there may be another option available to the buyer.
How to Begin an Application
It is recommended that anyone interested in this type of loan begins the process by speaking directly to the lender because of the number of specific USDA loan requirements that buyers need to know. USDA loans are only available for homes in rural areas, and there are eligibility tests for the buyer to take to prove they qualify for the program. The property that a borrower intends to purchase must also be located within the USDA eligible area map. Mortgage lenders can also provide pre-approval of financing that enables buyers to know how much they have available to spend on a home. Doing the paperwork first can help prevent disappointments later if a home or a buyer are not eligible.
Home buyers who have good credit, make enough money to cover their mortgage payments, and are able to prove their U.S. citizenship has a very good chance of qualifying for this type of loan. Many of the loans are able to be 100 percent guaranteed, so no down payment will be needed. There are restrictions regarding income limits, and the home must be used as a primary residence to qualify. Anyone who believes they meet all these standards should contact the San Antonio office to begin their application.
For more information about USDA Guaranteed Home Loans, contact our Home Loan Specialists at 210-802-4665 or use any of the tools on this website.