Keep Manhattan, just give me that countryside!  Are you looking to trade in your city life for the fresh air of the countryside?  If so, a USDA loan might be ideal for you.  The United States Department of Agriculture backs a government program which allows for 100% financing for properties in designated rural areas to borrowers who meet their income limits.

How Do I Find Eligible Properties?

Here’s a map of the eligible areas in Central Virginia.  Anything that is not shaded is eligible.

To check a specific property or to search your state for eligible regions, follow the steps below:

1. Visit this site.
2. Click on “Single Family Housing” under “Property Eligibility.”
3. Accept the disclaimer.
4. Enter a specific address or click on the map to search a part of your state.

Income Limits

In order to qualify, your household income must not be higher than USDA allows.  USDA underwriters will count everyone’s income who lives in the home towards the amount they will allow excluding foster adults and foster children.  So, if you have an adult child who lives with you but will not be on the loan, his or her income will be taken into consideration.  Or, if you have a parent living with you who receives social security, that income will count against you as well.

You will receive a deduction for each person living in the home who are 1) under 18, 2) over 18 and disabled, and 3) over 18 who are full-time students.  You will also receive a deduction for elderly family members’ medical care if they reside with you.  Lastly, you can deduct childcare expenses if they allow an adult in the home to work or further his/her education.

To use USDA’s online calculator to figure out if you are eligible, click here and follow the steps.  Limits differ by county and state, so you’ll need to have an idea of the county in which you would like to purchase.

You can also check this page on USDA’s website to see a list of all the county income limits in your state.

Pros of a USDA Loan

• Allows 100% financing.
• Offers low interest rates.
• Payment can be lower than FHA because of FHA’s monthly mortgage insurance.
• Instead of monthly mortgage insurance, there is an annual guarantee fee which will decrease each year and is lower than the monthly FHA insurance.

Cons of a USDA Loan

• Debt to income ratios are usually lower than FHA and conventional loans, so you will not qualify for quite as much house.  The difference is not too significant.
• Borrowers with no credit score are not eligible.  (With some other loan programs, you can use nontraditional credit if you do not have a credit score.  USDA requires at least one score, and it must be supplemented with nontraditional credit.  In short, nontraditional credit is proof that you pay other bills such as rent and utilities on time.)
• Must count student loan payment in the debt to income ratio even if they are deferred.  (Other loan programs will allow you to remove them if they are deferred at least a year past closing.
• In general, underwriting guidelines are tighter as the three bullet points above demonstrate.

Let Me Help

If you have questions about whether a USDA loan is the best product for you in Virginia please contact me for a mortgage consultation.  I’m also happy to help you figure out if you are eligible based on your income or to help you find a realtor who specializes in your desired rural area. 

To stay informed, follow me on Twitter and like me on Facebook.  If you are interested in purchasing or refinancing in one of the following states, I will be happy to connect you with a licensed loan officer or connect you with a realtor in your state: Maryland, Delaware, Connecticut, Florida, Georgia, Maine, Massachusetts, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, South Carolina, Washington D.C., or West Virginia.

Just for Fun: The Green Acres’ Theme Song

Green acres is the place for me.
Farm livin’ is the life for me.
Land spreadin’ out so far and wide
Keep Manhattan, just give me that countryside.

New York is where I’d rather stay.
I get allergic smelling hay.
I just adore a penthouse view.
Darling I love you but give me Park Avenue.

…The chores.
…The stores.
…Fresh air.
…Times Square.

You are my wife.
Good bye, city life.
Green Acres we are there.