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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
- 33.99/45.99% (DTI) with GUS Accept/Eligible underwriting findings
- 29/41% debt-to-income (DTI) with GUS Accept/Refer underwriting findings and credit score less than 679
- 34.00/44.00% debt-to-income (DTI) with GUS Accept/Refer underwriting findings and credit score(s) equal to or greater than 680 and with at least one of the following compensating factors:
- Reserves for a minimum of three months of mortgage payments, post settlement
- All employed applicants have been employed with the same primary employer for a minimum of two years. This is acceptable for income derived from social security and/or pension, but not self-employed applicants
- Proposed monthly mortgage payment, include principle, interest, taxes, insurance, and if applicable HOA or condominium fees, can’t exceed current verified housing expense by more than $100 or 5%, which ever is less. Requires proof of rent payments for the most recent 12 months. Payment history must show no more than one 30-day late payment within the most recent 12 months
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.