Below we will discuss the time frame for USDA Rural Housing loans in 2023. How long each step takes and what home buyers should expect during the process.
Keep in mind the timeframes listed below start AFTER a buyer has a fully accepted contract to purchase a home. The initial USDA pre-qualification process (before contract) only takes about 20 min to complete, please contact us for more details on this.
First, it’s important to remember that USDA RD home loans go through a two-step approval process. First, the USDA approved lender does all the underwriting on the 502 Guarantee loan – this includes documentation, appraisal, inspections, etc. Once the lender/bank is finished, they approve the file and forward it to the USDA Rural Housing office for the final approval or “final commitment” as it’s known.
Once the USDA office has the file, they generally take up to a week to issue the final commitment and send it back to the bank or lender for closing. This time can greatly change based on the state, loan volume, etc. But most USDA offices take about 2-7 days. Ok, let’s break it down below:
Step 1: The homebuyer goes under contract to purchase a home, and the loan process begins. The lender will begin all the paperwork with the homebuyer at this point – order appraisal, coordinate title work, and insurance, among other things. Generally, this entire process will take a few weeks on average to complete.
Step 2: Lender underwriting and approval are now complete and the loan file is sent to the USDA Rural Development office for final commitment. Again, the time USDA takes can vary greatly based on location and volume.
Applicants should expect this part of the process to take around 2-7 business days. Your lender should know the current USDA turn times in your area once your loan file is sent. * Please note, USDA Mortgage Source cannot advise on current turn times for any file already in process by another lender.
Step 3: USDA issues final commitment and the loan is clear to close. At this point, the lender and title agent will work to draw up the final closing documents. This generally takes a few days and after this, the buyer will close on their new home!
The entire USDA mortgage closing time will take about 30-40 days on average from contract to closing. Some less populated states are faster. Sometimes things come up in the process that can add small delays to the process.
Buyers should remember there are MANY moving parts to a real estate transaction. There are realtors, mortgage company, title agent, appraiser, home inspector, home insurance agent, surveyor… this list goes on. However, a good realtor and mortgage lender can manage the process to ensure everything runs smoothly.
If you are a new homebuyer and have questions about the USDA loan pre-approval process, please contact us at 800-743-7556 or just submit the quick info request on this page.
Buyers that have questions about an existing USDA loan currently in process will need to contact their lender, bank or mortgage broker direct for status and closing updates.
Also be sure to read the latest USDA frequently asked questions here. USDA Mortgage Source is a leading 100% USDA loan resource serving you 7 days week.
USDA Loan Final Approval – Closing Times