Buying a home is one of the best investments you can make. There are several types of home loans available for people in all financial situations and geographic locations. The USDA Home Loan is a lesser known type of home loan, but it is a great option for homeownership for those with low to moderate incomes, and for those looking to live in rural areas. USDA Home Loans for nurses are a great option to utilize, as nurses and healthcare workers are in demand everywhere, especially in less populated areas.
Advantages of USDA Home Loans for Nurses
USDA loans are offered to nurses and other applicants who wish to buy property in rural areas by the United States Department of Agriculture (USDA). This does not mean you need to live on a farm or township. Rural is defined by the USDA as a town with a population of less than 35,000. Some metropolitan suburbs even fit the requirements!
According to the USDA, these home loans “assists low- and very-low-income applicants obtain decent, safe, and sanitary housing in eligible rural areas by
providing payment assistance to increase an applicant’s repayment ability.” To get a better idea of what the income restrictions are, for a two person household in the Houston, TX area, income would need to be no more than $94,100. Or, in Charleston, SC, a low income, two person household income would need to be no more than $64,800.
USDA Home Loans for nurses offer low interest rates and do not require down payments. It is an excellent option for lower income earners who are finding it difficult to qualify for conventional loans. The following are the main advantages of USDA home loans:
- You do not need to make a down payment.
- USDA home loans have affordable, fixed interest rates, sometimes as low as 1%.
- Loan terms are generally 33 years, meaning you have that long to pay the loan back.
- USDA loans have somewhat flexible credit guidelines.
- Loan can be used to build a home, not just buy a home.
- If you already live in a rural area and qualify, these loans can also help refinance your current home.
Requirements for a USDA Home Loan
Because of some of the positive aspects of USDA home loans, there are very strict requirements that must all be met to be eligible. If you’re not sure if you or the property you wish to buy is eligible, you can use this tool from the USDA to check the program specifics for your state. Speak with Colorado Realtor Crystalle Guss Homes for Heroes specialist to be connected with a mortgage partner, who will be able to walk you through the requirements and all your questions. Plus, our loan specialists have reduced fees for nurses and other heroes like teachers, police officers, military, EMS, and firefighters. This is just one of the ways Homes for Heroes can save you even more on your home purchase.
USDA Eligibility Requirements
- Citizenship – To qualify for this home loan, you must be a U.S. citizen, or meet certain noncitizen requirements.
- No Housing – You must be without decent, safe, and sanitary housing.
- Unable to Obtain a Loan – You must be unable to obtain a loan from other sources, when the terms are reasonable to be able to meet.
- Primary Residence – The home you purchase with the USDA home loan must be your primary residence.
- Federal Programs – Since this is a government-backed loan, you must be eligible and not disbarred from federal programs.
There are some other requirements that you’ll need to meet in order to purchase a home in general. These are:
To get a USDA Home Loan, you should have a credit score of at least 640. While there is technically no credit requirement for these loans, scores of 640 and up are looked on more favorably. Lenders will use your past payment history and income to assess your creditworthiness, or ability to pay back the loan. If you have not been regularly paying your bills, including your credit cards, you are unlikely to get a USDA home loan. Lenders require that borrowers have a certain minimum monthly income to qualify for loans. If you do not make the minimum amount, or in the case of these loans specifically, over the maximum amount, your loan will also not be approved.
This loan requires that you have a stable regular income to qualify. It is crucial to prove to your lender that you regularly get paid. Homes for Heroes lending specialists are always working with nurses and understand the nature of your schedules. Between shift work, overtime, and on-call schedules, they will be able to work with your work history to get you the loan you need. This may include calling your current employer to better understand your hours, and to verify that you are in fact employed by them. Your lender will also want to see proof of income, so make sure that to provide your W2 forms from the previous two years, along with tax returns.
Willingness To Pay
You must also show your lender that you are willing to pay the loan. That is very different from the ability to pay. Your lender will want to see proof that you have made all payments on time for the last 12 months. This includes all other loans and credit card bills. If any payments have been passed to debt collectors recently, you will probably not qualify for the USDA home loan.
USDA Home Loans vs. Conventional Home Loans
Conventional loans are the most common home loan for mortgages. USDA home loans have some unique advantages compared to conventional loans. Here are the comparisons between the two types of mortgages:
- USDA Home Loans for nurses do not require borrowers to pay down payments, and the loans finance 100% of the home value. To get a conventional loan, one must provide a down payment, usually a minimum of 3%. Then, the difference of the down payment and the price of the home is provided in the loan value.
- There are income limitations to buy a home with USDA home loans, based on your state and county. Conventional home loans do not have restrictions on income, although you usually need to make a certain percentage of the loan amount.
- To get a USDA home loan, you must buy the property in what the USDA defines as a rural area. On the other hand, you can qualify for a conventional home loan for a home anywhere
- One of the stipulations of a USDA home loan is that the home you are buying has to be for your residential use and not for investment, but you can get a conventional loan to buy an investment property or a second home.
The home you wish to buy with an USDA home loan needs to serve as your primary residence. It also needs to be in an USDA-approved area. The loan can be used to buy new construction, condos, townhouses, manufactured homes, or foreclosed homes. These homes must also pass an inspection to ensure that they have essential qualifications like adequate roofing, operational electrical and plumbing, and are structurally sound. The house must also be:
- Located in a USDA defined rural area, usually with a population of less than 35,000 people.
- The home must be 2,000 square feet or less.
- Your home must appraise or have a market value of less than the loan limit for the area.
- The property cannot have an in-ground swimming pool.
- You can not use the property for anything relating to producing income.
USDA Home Loans for nurses can help you purchase a home, even if you think it might not be possible. It is an excellent choice for those planning to move to, or already live in, a rural area without access to other loan options. This loan finances 100% of the total property value, ensuring that you can comfortably move in. It is a fabulous loan option for nurses and health care workers looking to purchase a home.
Want to save even more on your home purchase? Sign up for Homes for Heroes home buying program. It’s free to sign up, and there’s no obligation for you. Simply sign up today and a real estate agent or lending specialist will reach out to you and discuss your home buying needs. As a thank you for being a nursing hero, Homes for Heroes real estate agents will give back part of their commission to you in cash after your closing. On average, our heroes save over $2,400 when buying a home. Sign up today!