Any advice on USDA rural housing loans?
April 3, 2014 10:28 AM Subscribe
Looking to buy a house in rural areas between Tampa and Sarasota. First-time homebuyer, attracted to the USDA loan program for its guarantees and all-encompassing mortgage which includes insurance, closing costs and possibly even repairs.
I want to hear the good and bad from folks who have recent experience from the program, what to look for in a lender or mortgage broker. If you have any recs for the area I'm talking about, all the better. Thanks.
Be aware of both income and property limits.
Most of the USDA programs come with pretty exacting household income limits, and it's not that hard to earn yourself out of eligibility. Assuming you're married, if you and your spouse are pulling in even $45k, that could put you right on the edge of eligibility in a lot of areas.
Then there's the requirement that housing be "modest," meaning that any purchase has to be approved not only in terms of credit, but in terms of comparison to surrounding properties. You're not going to be able to buy the biggest house in the neighborhood. In upscale suburban subdivisions, that doesn't matter much. Lots of nice houses, and the nicest not that different from the most modest. But in really rural areas, houses can be thinner on the ground, and even the most "lavish" house could be pretty modest by any objective standard. So you may find that, depending on the location, you won't be approved for a perfectly normal, 3BR 2BA because it's nicer than the shacks down the road and/or has too many amenities despite being pretty run down. I'm not saying it's a huge barrier, but it's definitely a thing.
None of which is to say that you shouldn't look into it. It's a fantastic program if you're in the right part of the country. But you do need to be aware that the price/value and debt/income figures are far from the only things that the USDA officer is going to be looking at.
posted by valkyryn at 11:19 AM on April 3, 2014 [1 favorite]
Most of the USDA programs come with pretty exacting household income limits, and it's not that hard to earn yourself out of eligibility. Assuming you're married, if you and your spouse are pulling in even $45k, that could put you right on the edge of eligibility in a lot of areas.
Then there's the requirement that housing be "modest," meaning that any purchase has to be approved not only in terms of credit, but in terms of comparison to surrounding properties. You're not going to be able to buy the biggest house in the neighborhood. In upscale suburban subdivisions, that doesn't matter much. Lots of nice houses, and the nicest not that different from the most modest. But in really rural areas, houses can be thinner on the ground, and even the most "lavish" house could be pretty modest by any objective standard. So you may find that, depending on the location, you won't be approved for a perfectly normal, 3BR 2BA because it's nicer than the shacks down the road and/or has too many amenities despite being pretty run down. I'm not saying it's a huge barrier, but it's definitely a thing.
None of which is to say that you shouldn't look into it. It's a fantastic program if you're in the right part of the country. But you do need to be aware that the price/value and debt/income figures are far from the only things that the USDA officer is going to be looking at.
posted by valkyryn at 11:19 AM on April 3, 2014 [1 favorite]
Usda loans take longer to close. Sometimes they get behind, necessitating a contract extension.
posted by St. Alia of the Bunnies at 8:38 AM on April 4, 2014
posted by St. Alia of the Bunnies at 8:38 AM on April 4, 2014
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posted by holgate at 11:16 AM on April 3, 2014