A California USDA loan is a home loan that is backed by the U.S. government USDA that is designed for homebuyers of low to moderate incomes in rural areas. It’s a government-backed loan that can be facilitated directly with the government or a private lender.
There are several benefits to the California USDA home loan, such as the 100% no money down feature. Additionally, the USDA home loan allows borrowers with less than perfect credit to still participate. The USDA loan California allows the seller to pay a large part of the buyers closing costs.
No, you do not need to be a first-time homebuyer to use the California USDA mortgage. The loan product is extremely popular with first-time buyers, but it is not a requirement. Move up buyers that use the loan program need to know that they must sell their current home before closing on their new transaction with the USDA loan. It’s not uncommon to see a move-up buyer close the day of or the day before their new loan is closed.
The USDA home loan does not technically have a minimum credit score. This is left up to the individual lender. Most lenders set their minimum score for this loan product at 620-660.
Determining a property’s eligibility is very easy. The fastest way to make the determination is to do a quick search on the USDA eligibility map. The search feature is very easy to use. It allows users to search by a specific address. Once the address is entered, it will tell users instantly if a property is eligible. If someone wants to buy a home but does not have one picked out, they can search for different areas to see where they should look for homes that will qualify.
The USDA loan California has its version of mortgage insurance that is called a guarantee fee. The loan has an upfront guarantee fee and a yearly guarantee fee. The upfront fee is 1% of the loan amount and is added to the loan. For example, if the loan amount is $125,000, the guarantee fee is $1250 making the total loan amount $126,250. This has a very minimal impact on the overall total payment. The yearly fee is .35% and is paid put monthly. Of all the government-backed loans, the USDA loan California has the lowest of these types of costs.
The USDA loan has a qualifier that is unique only to it. Since, by definition, the loan product is designed for low to moderate-income families, the USDA has set maximum income limits for households. The tricky part about this is it pertains to any working adult in the home, even if they are not on the loan. They base their income limits on 115% of the median income for a given area. The income limits throughout California will change from county to county based on the average incomes of a given county.
No, the California USDA home loan is a 100% no money down loan so a down payment is not required.
The California USDA mortgage does not have a maximum loan amount. Borrowers will have to meet the debt to income requirements based on their income as well as meet the household income requirements.
The USDA loan program does allow for refinances; however, the homeowner must currently have a USDA loan to refinance into a USDA loan. If the current loan is not a USDA loan, then it will not be allowed to refinance into a new USDA loan.
This will be left up to the individual lender to determine if they charge an application; however most lenders do not charge such a fee.
No, the USDA home loan does not have a pre-payment penalty. Homeowners can pay extra on their pay each month if they choose to do so or pay the mortgage entirely with no recourse.
Yes, during the loan process, your lender will be required to order an appraisal. This is a third-party cost that your lender will typically pass along to you. Most appraisals range from $450-$650.
While it is not required to put money down, homebuyers can if they choose to do so. Putting money down will lower the monthly payment.
The USDA loan does not allow a non-occupying co-borrower.
Yes, buyers can buy from individuals that do not have the home listed with an agent.
The USDA does not require flood insurance unless the home is in a flood zone. It is always a good practice to check with your loan officer before starting the process to determine if the home is in a flood zone.
Yes, the California USDA home loan does require buyers to escrow their taxes and insurance. The amount collated will be based on the taxes and insurance amount as well as the time of the year that the transaction takes place.