Georgia first time home buyers still have beneficial home purchase options that don’t require a down payment. Many buyers are still unaware that the USDA (United States Department of Agriculture) and Rural Housing still offers 100% home loans through approved mortgage lenders and banks.
In the past, many buyers thought of USDA as loans only for ranchers – to be used only to purchase properties in country agricultural farm areas. That is not the case today with the Georgia USDA Rural Development home loan. In fact, properties in almost every area outside of Georgia’s major metropolitan areas, including Atlanta, Macon, Columbus, Valdosta, Albany, etc, can be purchased with the 100% USDA loan today.
A USDA loan provides low-cost government-insured home mortgage loans that suit a variety of options. The program is especially great for Georgia first-time homeowners that have little to no cash savings for a large down payment.
Georgia First Time Home Buyer Program: To begin – let’s discuss the different USDA mortgage types: Currently, there are two kinds of USDA loan programs available for single-family households:
USDA 502 Guaranteed Rural Housing Loans:
USDA 502 Guaranteed Loans are the most common type of USDA loan and allow for higher income limits and 100% financing for home purchases. USDA Guaranteed Loan applicants may have an income of up to 115% of the median household income for the area.
Income limits in Georgia start at $110,650 but can vary from county to county. Household size also determines the allowed income limits, please see the latest Georgia USDA income limits here. Most home buyers will fall under the 502 Guarantee loan and the guarantee program is offered by only USDA-approved lenders and banks.
All USDA Guaranteed Loans carry 30-year terms and are set at a fixed rate, no adjustable rate terms.
USDA Direct Rural Housing Loans:
USDA Direct Housing Loans are only offered directly by the USDA. These loans are less common than USDA Loan Guarantee Program loans and are only available for low and very low-income households to obtain homeownership, as defined by the USDA income eligibility requirements. Very low income is defined as below 50 percent of the area median income; low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Click here to see area income limits for this program.
2023 USDA Loan Requirements:
- Currently, a min 600-620 credit score is required by most lenders for max 100% financing.
- The home being purchased must be located in a USDA approved area. See the map here.
- Household income must be below the income limit per county
- USDA permits the home seller to pay buyer closing costs – up to 6%
- USDA home loans do not have a set loan amount limit. The borrower qualifies based on their debt to income ratios. The current debt to income ratio limit is 29/42. This can be exceeded in some cases with strong compensating factors like great credit, great job history, assets, etc.
Like most mortgage programs that require less than 20 percent down payment, the USDA mortgage program will require an upfront guarantee fee and mortgage insurance (known as PMI) Effective 2023 USDA mortgage insurance rates (PMI) are:
- For purchases and refinance programs – 1.0% upfront guarantee fee paid at closing, based on the loan size. The guarantee fee is allowed to roll into the borrower’s loan amount. So you can finance up to 101%
- For all loans, 0.35% annual fee, based on the remaining principal balance. This monthly premium is added to the buyer’s payment each month – like taxes and home insurance. All USDA loans include taxes, home insurance and mortgage insurance. Many buyers know this as PMI – or private mortgage insurance.
Below we listed a few interesting facts about the USDA RD home:
- USDA 100% loans are 30 year fixed-rate mortgages.
- Georgia USDA Rural Housing loans have very competitive 30 year fixed interest rates.
- Georgia USDA loans do not have pre-payment penalties – move or sell your home anytime.
- USDA 100% Home Loan Financing does not require a down payment
- The program does require monthly mortgage insurance, but the monthly amount is nearly half the amount of a comparable FHA home loan.
- There is no special first-time buyer class needed to apply for a GA USDA loan. Contact us below and have your USDA loan application complete in no time!
Georgia home buyers that have questions or want to learn how to apply can call us at 800-743-7556. You can also just submit the short Info Request Form on this page for quick service.
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