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Virginia USDA Loan Guidelines
Borrower Eligibility
- U.S. citizens
- Permanent resident aliens
- First time homebuyers allowed
- Non-occupant co-borrowers NOT allowed
Commitment Fee
- USDA charges a 1% Commitment Fee
- Commitment Fee can be financed into the loan
- Example:
- Purchase price – $100,000
- Base Loan amount – $100,000
- Commitment Fee – $1,010 ($100,000 [purchase price] /.99 – 100,000)
- Maximum financed loan amount = $101,010
Down payment Requirement
- No down payment is required
- If borrower has adequate liquid assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan
Eligible Properties
- Must be in an eligible USDA Rural Development Location
- Owner-occupied properties
- Existing attached & detached single family residences
- New construction with permanent financing only
- PUD’s (i.e. Townhomes)
- Condo-units. HUD, VA, FNMA or FHLMC approved project
- Log cabin homes, provided Appraisal Report lists other comparable log cabin homes that have recently sold in the area
Ineligible Properties
- Co-ops
- Mixed-use
- Condotels
- Manufactured homes
- Single Family Homes where the land value excess 30% of the appraised value and can be sub-dividend.
Loan Amount
- Minimum loan amount: $80,000 standard purchase/refinance transaction. $120,000 for construction and renovation transactions. (Note, this is an internal lender guideline. The USDA Loan program has no minimum loan amount guideline. If you are purchasing a house with a price less than $80,000 contact other lenders to determine if they will service your mortgage requirements.)
- Maximum loan amount: No limit. The maximum loan amount that a borrower can qualify for will be determined by the borrowers debt to income ratio and Guaranteed Underwriting System’s findings
Maximum Income Amount
- County specific. Reference the USDA website for adjusted household income limits
Maximum Loan-To-Value
- Maximum loan-to-value is 101.01%
Maximum Mortgage Amount
- None
Minimum Credit Score
- Middle Credit Score – 640 for each applicant for GUS automated underwritting approval
- Middle Credit Score – 580 for each applicant for manual underwritting approval and a documentable rent history within the last 12 months
Monthly Mortgage Insurance Premium (MIP) Requirements
- USDA requires a monthly mortgage insurance premium with an annual factorial of .35%
Multiple Property Ownership
- USDA primarily often won’t allow applicants to own other properties
- Exceptions include when the other property owned is:
- Not owned in the local commuting area as the new property; or
- Not structurally sound and/or functionally adequate
- Manufactured home not on a permanent foundation
Occupancy Type
- Owner occupied only
Qualifying Ratios
- 29/41% debt-to-income (DTI) – Target
- 33.99/45.99% debt-to-income (DTI) – With compensating factors such as:
- 680 or higher credit score
- No or low “payment shock” – less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses
- Fiscally sound use of credit
- Ability to accumulate savings
- Stable employment history with 2 or more in current position or continuous employment history with no job gaps
- Cash reserves available for use after settlement
- Career advancement as indicated by job training or additional education in the applicants profession
- Trailing spouse income – as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area
- Low total debt load
Occupancy Type
- Owner occupied only
Seller Contribution
- 6% of sales price towards closing costs, prepaids, discount points, buydown fees, and upfront Commitment Fee
Transaction Types
- Purchase
- Rate/Term Refinance on existing USDA loan
Receive loan approval from an approved USDA lender
- To determine your eligibility for a mortgage loan complete a loan application using our secure encrypted online application.