What Every Homeowner Needs to Know About USDA Loans

USDA loan for country home with pasture and fence

The United States Department of Agriculture is one of the most important organizations for national homeownership. While the office may be associated with raising livestock, growing crops, and monitoring food safety, they also stimulate the real estate market in rural and suburban areas (which are vital to the agriculture industry) by guaranteeing loans in certain locations.

Before you choose a home mortgage, make sure you fully understand the potential benefits, and drawbacks, of USDA loans.

Understanding the USDA Single-Family Housing Guaranteed Loan Program

The USDA-loan program helps secure loans to low- and moderate-income households, providing the opportunity for affordable homeownership with comfortable and safe housing. People who are eligible for USDA loans can use the provided money for a wide range of purposes, including purchasing a home. Applicants can also build, rehabilitate, or improve a home with a USDA loan. To make home loans more accessible, the USDA provides 90% loan-note guarantees to lenders, reducing their risk, which makes them more likely to offer loans to applicants.

The money provided by a USDA loan can be used to purchase a new or used house that will become a permanent residence. Closing costs and other expenses related to real estate purchases can also be included in the loan. The money can be used to repair an existing home, and it can also be used to refinance certain home loans. If you or a family member has a disability, USDA loans can also be used to design and install special accommodations.

With money from the loan, you can also pay for utility connection fees, which are often related to water, electricity, and gas connections. You can even use the money for a share of real estate taxes.

If you need to improve the home, USDA loans can be used to install essential equipment, including ovens, refrigerators, and heating systems. You can even use the money for wall-to-wall carpeting. If you want to increase your new home’s energy efficiency, the loan can be used for insulation, solar panels, and double-paned windows, among other home-improvement expenses. Even site preparation costs for projects like sidewalks, foundations, and planting trees are covered by USDA loans.

There is a lot you can do with this program, but not everyone, nor every property, will be eligible.

Eligibility Requirements for USDA Loans

To be eligible for a USDA loan, both you and the property will need to meet specific requirements. First of all, you will need to meet income-eligibility requirements set by the USDA. The income requirements vary by region; for example, the single-person requirement for “very low income” eligibility in Billings, Montana is $23,700, while the same category in Sand Diego is $45,700.

If you meet the income eligibility, you’ll then have to meet other requirements. You’ll be required to agree to live in the property as your primary residence, and you must be eligible for participation in federal programs. Obviously you will also need to prove that you are a legal U.S. citizen or qualifying alien, but you’ll also have to show the legal capacity to incur the loan and the willingness to meet all credit obligations.  If you are personally eligible, you can start looking for property that meets the program’s criteria.

USDA loans depend on the specific location of the home, and you must purchase a house that is in a rural area, which is defined by the USDA. However, not all “rural” locations will be in the countryside. Many suburban areas are actually eligible for USDA lending products, so you can find a high-quality home that is still inside a city’s jurisdiction. 

How to Look Up Your Property

Suburban homes on nice street
Many suburban homes are eligible for USDA loans.

The USDA provides a map that allows you to check eligibility of certain locations. You can search eligibility by address or by geographical location. In fact, you’ll see that some states are almost entirely eligible for USDA loans, and even highly-populated states like California have a large portion that is eligible for the program.

To search for housing, use the USDA’s map system. The link will take you to a disclaimer page; once you agree to the terms, you’ll be taken to an interactive map of the USA. You can then type in a specific address in the field at the top left, or you can zoom into a specific region or city. The map will show ineligible areas in light brown; all locations not highlighted are eligible for USDA lending.

USDA Home Loans: The Process

The process for finding a USDA loan is actually quite simple. First you will need to apply with a lender that can facilitate USDA loans, then get pre-approved for a loan by submitting your income, credit, and employment information. After you are pre-approved, you can find a home that meets the eligibility requirements and then get full lender approval. There will be a final sign-off by the USDA and then the loan will close. Once that step is completed, you can move into your new home!

USDA vs. FHA: Which is Right for You?

The USDA is obviously not the only government organization that provides lending support. The Federal Housing Administration (FHA) also provides loan guarantees, but these two organizations are not always providing the same options. While FHA is more commonly used by borrowers, a USDA might be right for you if you need a loan with no down payment requirements. While the FHA down payment requirements are minimal (usually 3.5%), it can be a barrier for some borrowers. The USDA also offers loans with lower mortgage insurance costs, which will lower the total cost fo homeownership.

However, the FHA has no income requirements and relatively few requirements related to the property’s location, so it is often a better choice for many borrowers.

Find Out If You Are Eligible for USDA Loans

If you have questions about USDA loans, contact the team at San Diego Purchase Loans today. We’ll help you understand the best options for your specific needs, and we’ll take a common-sense approach to lending, giving you the best possible chance at approval!

CONTACT US FOR INFORMATION ON USDA LOAN OPTIONS

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I was amazed how quickly Chad was able to knocked out our refinance!. I highly recommend Chad he & his team did an incredible job! I had 3 others I was working with, including a Credit Union. Chad was able to offer me a lower rate with no fees! Based on the other 3 top financial bids I had for this refinance. ”

“Thank you for all the hard work (even on weekends!) you and your team have devoted to seeing this through in a very efficient manner. It’s been an easy process for me and, you and your team have been a delight to work with.”

“We’re loving our new place and we’re very pleased with how smoothly everything went through closing. Thanks for keeping us up to date on the possibility of refinancing at a lower rate; we trust your judgement as far as waiting until the rate is around 5% lower before we refinance. We’re very interested in pursuing that if rates drop to that level. Thanks so much for all your help and personal attention!”

Awesome Team

Chad and his team was awesome throughout the entire process. They made things easy and smooth, and able to answer any questions at anytime. By far the best experience with a lending team yet. Great job!”

Excellent service!. Recently purchased a property in Northern San Diego County. Chad and his team were recommended to me to check out. The rate he acquired was a full point & a half better than the Broker I have been using for years. His team was exceptional and did great follow through. Definitely 5 star service!”

“Chad, Juliann and the team were great in helping me get through this process. It is not an easy process but they stayed with me the entire time and I am truly grateful. ”

EXCEPTIONAL, SUPER EXCEPTIONAL! The most professional, accountable and committed mortgage service we have ever worked with. With numerous experiences in buying and refinancing homes, by far Chad Baker and his team remain at the top of our list. We feel very blessed to have located such a committed company who serve their clients with an exceptional first “first class” mindset.

“Hey Chad – thank you so much to you in particular as well as your team. It’s been a real pleasure working with someone who’s as responsive and helpful throughout the process, as you’ve been. We really appreciate what you’ve done. ”

“Chad and his group made the mortgage approval process smooth and understandable. Multiple updates and explanations during the process kept me informed of progress. Chad also provided great advice on other home services, in particular an insurance company that saved me thousands of dollars a year on home and auto insurance.”

“Good experience

I recommend chad because he is not pushy or trying to manipulate as others in the same business, the process was smooth with no obstacles, best team. ”

“This is the second time that I have worked with Chad (home purchase & refinance). He has become my subject matter expert and someone I depend on for all finance needs related to our home and real estate investments. My favorite things about Chad are his depth of knowledge, responsiveness, honesty and the great service he provides. I have referred countless friends and family of mine to work with him for no other reason than I know that he will treat them well and equip them for the best possible outcome. Chad will add tremendous value to any real estate transaction that you have and I am grateful to have him as a resource.”

Chad and his team were Awesome to work with! I was referred to Chad by a good friend of mine. I was very impressed with the professionalism and quick response times from Chad Baker & his team during the entire process. I screened over 3 lenders before selecting the Chad Baker Team and I’m confident I made the right choice. It’s obvious that customer service is their #1 priority and it shows. I highly recommend Chad if you have lending needs. ”

“Chad and his team are exactly who you want handling the financing of your home. Whether it be a new purchase or refinance, he and his team are one of the most professional, responsive group of people I’ve worked with. Buying a home can be very stressful and Chad and his team took all of the necessary steps to make the process as painless and as quick as possible. They are extremely knowledgeable, organized and have great follow through. You won’t ever be left wondering what the next steps are. I highly recommend him and will use him in all of our real estate transactions moving forward.”

When looking for a house, we had couple recommendations for a lender. After talking with all the lenders, many were difficult to work with and couldn’t get it done as quickly as we needed. I was referred to Chad Baker’s team and I am glad we did. Not only did they get the things done quickly for us, they were very easily to get ahold of. It wasn’t rare to get a response within 15 minutes whenever an email was sent. I could not express how friendly and outgoing this team is. And on top of that, they came back with the best offer for us amongst all the other brokers. I am glad I worked with these guys. If you are looking for a lender…MAKE SURE TO CALL CHAD BAKER AND TEAM!!! Thanks Chad for all your hard work. Next time we buy another house I am calling you first!

“Chad and The Chad Baker team really helped me from start to finish with my loan process. They were extremely responsive and provided me updates on a daily basis. I had a few personal issues that they helped me work through so I could get the best loan program and best rate. Very knowledgeable about the industry, rates and trends. I HIGHLY recommend Chad and his team. I’m happy to offer a reference upon request. Please ask Chad for my contact information.”

“Hey Chad, Just wanted to send a quick note to Thank You for all your work and effort to get this escrow closed. It was a pleasure to work with someone as professional as yourself. If I have a client that ever needs a lender you will definitely be someone that I  would recommend.”

“Chad – Your team has been nothing short of amazing. Juliann has aggressively followed-up with escrow and gone out of her way to make sure things get done on schedule. Matt and I can’t express to you enough how much we’ve appreciated all of your counsel at the beginning of the process and her execution to see it through to close. As always, appreciate everything that you guys have done to see this through.”

An ‘A’ Team!
We just closed on our second transaction with the Chad Baker team. They are very well organized and I can attest that they are looking out for their clients’ best needs. A special shout-out for Juliann B. who was our guide through the painful loan process. We found Juliann to be very responsive, kind, patient, and diligent in getting both our refis closed well.”

“Chad and his entire team were over the top amazing, professional, and attentive throughout the entire home loan/buying process. I could not have asked for a better team to have on my side through what could be one of the most challenging and stressful processes one experiences. From the first conversation I had with Chad, I felt comfortable with him. He helped guide us through the process without ever once making us feel uneasy, unimportant, or uninformed. I never felt silly or stupid for asking the same questions over and over until I fully understood what we were getting into, or until something made total sense to me. The home loan world is fast paced, overwhelming, and confusing, and Chad and his team held our hands and helped us to feel comfortable and confident about our choices. He and his team were always there for us day or evenings, weekdays, or weekend and never made you feel like you were a bother if you had a burning question you had to get answered at 8pm Saturday night. I will use them again and again, and suggest them to any friend, family, or acquaintance. Seriously, they are rock stars. They work hard for you to get you into your dream home, we could not be happier with their hard work, dedication, and kindness.”

highly recommend Chad and his team. They were always available for any questions, concerns etc. we had. The process to close the loan went super fast. Chad and his team always went above and beyond. The customer service was the best! I will definitely recommend to all Thank you again for everything!

“Chad and his team got me funded in less than 30 days, completing a deal that another broker fumbled around with for almost 90 days. Effective, efficient and excellent communication skills. Outstanding professionalism.”

I HIGHLY recommend Chad and his team.

Chad and The Chad Baker team really helped me from start to finish with my loan process. They were extremely responsive and provided me updates on a daily basis. I had a few personal issues that they helped me work through so I could get the best loan program and best rate. Very knowledgeable about the industry, rates and trends.I HIGHLY recommend Chad and his team. I’m happy to offer a reference upon request. Please ask Chad for my contact information.”

Amazing Service!

Chad and his team were very attentive to all of my needs, they called , emailed and checked in often. No question was left unanswered! Maria was a superstar! taking all my calls no matter the time or day and walking me through every process. The follow through was amazing and I am just so happy that my realtor referred them to me. I was originally referred to another lender that pretty much had no time for me nor did they even bother to try and find me the right loan since I am a widow with one income and a first time buyer with so so credit. I am completely happy with my loan and everything they did for me! Thank you Chad, Maria and Karina for all you did!

“I must say I was extremely impressed with the professionalism and quick response from Chad Baker & his entire team. I screened over 5 lenders before selecting the Baker Team & boy am I happy customer. It’s evident that customer service is a priority for these folks.”

I highly recommend Chad Baker. He does a phenomenal job and won’t trauma you or your clients. He has a whole team that works on the loans. And all the team members are great. He has a person that can translate for your clients that are Chinese. He is as good of a loan officer as you are an agent, and that is what you want when referring clients to a lender.

“Chad and his team were fantastic. They were incredibly responsive to us and our needs. Chad laid out several refinance options for us, and was very supportive when we decided on the option we felt was best for our family. Chad and his team worked our deal and got our mortgage funded incredibly fast, with excellent service and even took the time to thank us personally once we funded. I can’t recommend Chad enough!”

As a first time home buyer, I wasn’t sure what to really expect, but Chad and his team made the process very clear and easy. Once the process was over, they didn’t just vanish either. They kept in touch and looked for opportunities that may benefit me. A couple years later, they found me a great refinance opportunity that saved me a lot of money! Once again, the process is long and grueling, but Chad and his team made it as painless as could be. Any barrier that I encountered, they found a quick solution to make it happen. Mortgages are a huge commitment and I wouldn’t pick any other team to help me make the right decisions.”

Thank you, Chad. You have been amazingly responsive to all my questions, and you have a great staff assisting you. Thanks so much for all your help!

“Hi Juliann and Chad, I wanted to take a moment and thank you guys for what would have been impossible for us to do without you. We wouldn’t have our keys in hand if it had not been for your help in navigating the financing, and Juliann’s perseverance in getting the rest of the players in the transaction to deliver. Out of everything, our interaction with your office has been a highlight – and your customer service has been beyond everything we’ve experienced in the real estate industry. Is there a way we can provide any reviews, ratings, testimonials, or other statements that can express to your potential future customers how much you guys do to make the customer’s life easy? Please let us know how we can share our great experience with you to the rest of the public. Whether we refinance this under a VA, or get in a bigger/better house in a few years, we’re not going to go anywhere else for financing. We are customers of yours as long as you are in business. Thanks again for getting us in a house!”

Excellent service!
My wife and I purchased a home in Escondido, first home together. Chad and his team made the whole process extremely easy and helped us close quickly. Will recommend to all friends and family!”

Chad Baker and his team are amazing!

My husband and I found Chad through an article he had written. Every aspect of working with Chad and his team was exceptional. From our initial phone call where he explained the many options we had, to advice he gave in dealing with somewhat challenging sellers, and closing our loan ahead of schedule, the loan process with Chad and his team went very smoothly. I especially appreciated the one-on one guidance from Juliann, who really made me feel like I was her only client. I look forward to working with Chad and his team again and would highly recommend them to anyone looking for a mortgage.

Outstanding experience

I was referred to Chad by my Realtor for a purchase of a new house. The experience with Chad and the team (I mainly worked with Juliann) was nothing short of outstanding. From start to finish there were always quick to respond and when needed, notify me of any new documentation that was required. There were very helpful explaining to me the pros and cons of different financing options as well as some other loan related issues, such as termite clearance outside the purchase contact and septic tank certification process. Overall, very knowledgeable and processional team. Loan preapproval was done in a single day and loan documents were ready for signing in 21 days, which was 9 days ahead of schedule. That never happened to me before.

“We signed all our papers yesterday afternoon. I wanted to thank each one of you for all your hard work and tenacity in making this happen for Michelle and I. This is by far the easiest closing we have been through. All thanks to you all. You all the best at what you do. No other group works like this together. Again, thank you all, from Michelle and I, we will be forever grateful. Absolutely the best team I have ever dealt with. From beginning to end, the customer service provided was beyond reproach. Everyone gave us their personal attention and that made it so easy.”

Everything about our transaction with this lender was perfectly explained to us, easy to do, and they were able to help us get our loan closed ahead of schedule. It was a perfect 10 and we couldn’t have been happier with the whole thing

Chad was very personable. His staff was very suportive.
I had the pleasure of working with Chads team. Everything went as planned. I was very pleased. I still want to take them to dinner. I am completely enjoying my new home”

Great Job Chad Baker Team & Homepoint!
I was very impressed with the professionalism and quick response times from Chad Baker & his team during the entire process. I would highly recommend Home Point for mortgage needs. Great Job! ”

“Juliann – Thank you very much for your patience and help with everything. I can say 150% that we could not have gotten through this without you. I have been through this process before a few times BUT never have received this type of care/attention. This process is intense and you managed to humanize this life changing experience for us – rather than being a loan number. If you or Home Point ever need an official recommendation from us, you can count us in.”

Thank you Chad and Team

Chad and his team have been a pleasure to work with. I’m a 3rd time home owner. Wish I had known Chad and team a lot sooner. He made my 3rd home purchase very easy. There were a lot of moving pieces and they handled with professionalism and care. Juliann was a pleasure to work with too. The whole team made it possible for us to move into our dream home. Thanks you Chad and Team!

“I wanted to reach out and tell you both Thank You for working so hard on my loan. I really appreciate how much effort you both put in to make it happen! Top notch, one of the best I have ever seen in the business.”

Outstanding experience

I was referred to Chad by my Realtor for a purchase of a new house. The experience with Chad and the team (I mainly worked with Juliann) was nothing short of outstanding. From start to finish there were always quick to respond and when needed, notify me of any new documentation that was required. There were very helpful explaining to me the pros and cons of different financing options as well as some other loan related issues, such as termite clearance outside the purchase contact and septic tank certification process. Overall, very knowledgeable and processional team. Loan preapproval was done in a single day and loan documents were ready for signing in 21 days, which was 9 days ahead of schedule. That never happened to me before.

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I hope you enjoyed reading this article. It's my goal to keep you updated with the latest real estate mortgage news. I'm proud to provide you with 100% original and unique content. Subscribe now to get high quality real estate mortgage content and articles delivered directly to your inbox. Chad Baker is Regional Manager for LendUS. Chad is consistently recognized in the top 1% of mortgage originators in the United States 2011-2017. Got a question for Chad? Call (858) 353-8331 or submit your question online