How to apply for a USDA home loan

Looking to buy a home? Whether you’re a first-time homebuyer or a seasoned homeowner, you may be eligible to qualify for a USDA home loan.

There are many advantages to getting a USDA home loan, from low interest rates to minimal money down. But you may be wondering how to apply for a USDA home loan and whether you’re even eligible. Solarity Credit Union has your answers.

We’ll explain what you need to know when applying for a USDA home loan, so you can figure out whether it’s the right home loan option for you.

Do I qualify for a USDA home loan?

USDA home loans are designed for very-low-, low- and middle-income borrowers, so there are certain income restrictions that apply to each loan type. The first step in applying for a USDA home loan is to check the program income restrictions for your particular area.

To get started, simply follow this map to view the income limits for the Single Family Housing Direct Loan and this map to see the income limits for the Single Family Housing Guaranteed Loan. We’ll go into detail about each loan program in just a bit. But for now, check the income restrictions to see whether you qualify for one of these programs.

If you’re interested in applying for the Single Family Housing Direct Loan and you reside in Washington State, pull up the map and click on Washington. You’ll see a breakdown of localities. Let’s say you reside in Yakima, for example. If you have a household of four or fewer, you must make no more than $106,400 to be considered of moderate income.

If you prefer to explore the Single Family Housing Guaranteed Loan program instead, you can learn more about that program’s income eligibility requirements here. You’ll first need to select your state and county. Then you’ll be prompted to answer some basic questions about your household makeup and income. Be sure to input your monthly household income, not your annual income.

In addition to meeting income eligibility requirements, you must plan to purchase an eligible property or do a new home build in an eligible area in order to qualify. USDA home loans cannot be used for second homes or investment properties, so you must also agree to use the home as your primary residence. US non-citizen nationals are eligible to apply, but you cannot have been disbarred or suspended from participating in any federal programs.

If you meet these requirements, USDA home loans are an excellent option for borrowers who have been unable to obtain conventional financing.

What types of USDA home loans are available?

What’s the difference between the USDA Single Family Housing Direct Loan and the USDA Single Family Housing Guaranteed Loan?

The Single Family Housing Guaranteed Loan Program makes it easier for low-income and moderate-income individuals and families to secure financing from traditional lenders. That’s because the government offers loan guarantees to the lenders in the event that the borrower defaults.

On the other hand, the Single Family Housing Direct Home Loan is for low-income and very-low-income individuals and families. This loan can be applied for directly through your local USDA Rural Development Office.

If you’re interested in a USDA home loan and have already found a property you’re interested in purchasing, you can check the Property Eligibility page to determine whether the property qualifies. Simply select the tab at the top of the page for loan type and then select the property eligibility tab to plug in the address.

If you haven’t yet found a home you’re interested in buying, you can contact your local USDA Rural Development Office for leads on eligible properties. You also have the option of building your own home in an approved area.

How to apply for a USDA home loan

Want to take advantage of low interest rates and longer loan terms so that you can lower your monthly mortgage payment? Want to secure 100% financing or roll closing costs into your loan? All of that is possible with a USDA home loan.

If you think you may qualify for a USDA loan and want to take the next steps toward applying for one, try out the Single Family Housing Direct Self-Assessment Tool. The tool will assist you in determining whether the program is the right option for you. You can get started by filling out some basic information such as your monthly income, monthly debt obligations and property location to assess whether you may qualify for the program.

Keep in mind that the self-assessment tool is simply a resource to help you learn more. You must complete the Direct Loan program application to receive an official determination of program eligibility. Applications can be submitted at your local rural development office. You can view the applicant orientation guide video to learn more.

How to apply for a USDA home loan with Solarity

What if you find that you’re unable to qualify for a Direct Loan? If you live in Washington State, you can visit the team at Solarity Credit Union to learn whether you may qualify for the Single Family Housing Guaranteed Loan program.

It’s quick and easy to apply for a USDA home loan with Solarity. Simply fill out our online application form. If you are not ready to apply, you can chat with an expert Home Loan Guide who can help you get a feel for which loan type may be most well-suited for you as well as the associated interest rates. The team can help you assess your finances, what you may or may not be able to use for a down payment. From there, Solarity Home Loan Guides would provide you with an estimate of closing costs and your monthly mortgage payment, so you can determine what loan works best with your budget.

Solarity Credit Union believes in empowering people like you to achieve their financial goals. We accomplish this by thinking outside the box and offering creative financial solutions to our members and valuable information, like how to apply for a USDA home loan.

If you’ve had home loan applications denied in the past, don’t let that stop you from exploring your options. Schedule a time to visit with us so we can see whether you qualify for a USDA home loan. It could be just the opportunity you need to get your foot in the door and eventually the front door of your brand-new home.