Do You Pre-Qualify for USDA Loans in Pennsylvania?
Welcome to a discussion on USDA Loans Pennsylvania brought to you by churchfinancing.biz! As you are probably aware, right now you’re considered almost Pre-Qualified Candidates!
On our page here and we’re going to provide you with everything you need to know about USDA loans in Pennsylvania.
So USDA loans are a government program meant to promote homeownership in rural areas. Typically the costs are significantly lower.
You get into home ownership with USDA Loans.
Zero percent down, mortgage insurance is significantly less than your FHA loans and your interest rates too are typically lower than your traditional mortgage rates.
They’re available from any mortgage lender. So you don’t have to go through a special entity or even the government to get approved. There are USDA income limits on this type of loan.
So you need to make sure you qualify because they are meant for the medium earners. And the loans are geographically based.
Finding USDA Eligible Areas in PA
So the home that you’re purchasing must be in an eligible area but most suburban areas are.
And if you’re a home buyer, if you’re thinking about buying a home I encourage you to check this one out first before you jump right into conventional because you may be surprised.
For more on this topic, for more about USDA loans click the link here: USDA Loans.
So you’re a prospective Homebuyers in Pennsylvania? Well, USDA Loan Info in conjunction with churchfinancing.biz brought in one of our Qualified USDA Loan Agents.
Now, what are the pros and cons of a USDA loan?
Pro number one is that there is an option for no down payments.
Con number one is that there’s some geographical restrictions.
Because this program is meant to support purchasing a home in rural areas, there are geographical restrictions that could cause quite a long commute if you are working in the city.
Pro number two, there’s some flexible credit guidelines. There’s the 640 minimum, and if you do have a few dings, you’re probably gonna still be okay.
Con number two is that there’s some income limits.
You do have to meet income limits that are based off of the median income in the area you’re living in.
Pro number three is that the interest rates are typically lower than your standard conventional loan.
Con number three is that you can’t get out of the mortgage insurance. While it is a little bit lower with the USDA loan, it’s still gonna add to your overall costs.
Thanks so much for reading our USDA Loan Pro’s and Con’s information packet. For more on USDA loans, for the pros and cons, check out our blog at churchfinanzing.biz.
Thanks so much for reading, we’ll see you in our blog posts section where we will be covering USDA Loan Income Limit Guidelines.
Pennsylvania Areas that Qualify for a USDA Loan
You just may be surprised at how many Pennsylvania areas qualify for a USDA Home Loan. Designed to stimulate growth in small or rural communities, areas that are eligible for a USDA Loan include:
Communities located outside of city limits
Communities with less than 20,000 people
Never assume that your area does not qualify for a USDA Loan. The experts here at churchfinancing.biz are here to help, fill out the Pre-Qualification Application, or call one of our certified USDA loan agents at (888) 464-8732.The USDA loan, also known as the USDA Rural Housing Loan Program is a 30 year fixed rate mortgage that is created for low to moderate income home buyers. The house must be located in an USDA eligible area of Pennsylvania. The USDA mortgage loan does not require a down payment (100% financing plus the guarantee fee). The USDA home loan is a zero down mortgage program. Home buyers must meet the income limits for PA (see below). You can estimate the USDA loan amount and mortgage payment with the USDA calculator. The loan is "insured" by the United States Department of Agriculture. USDA Income Limits for Pennsylvania The income limits vary by the Pennsylvania and the metropolitan statistical area (MSA) and household size: The 2018 - 2019 Pennsylvania base USDA income limits are: 1-4 member household: $82,700 5-8 member household: $109,150 There are county exceptions for higher incomes. See USDA income limits Annual income includes all eligible (gross) income from all adult household members, not just parties to the mortgage. The household income may be adjusted downward due to: Care of Household Members with Disabilities Child Care Expenses Dependents Elderly Household Medical Expenses The USDA provides extensive information on income determination in Chapter 9 of the SFH Guaranteed Loan Program Technical Handbook USDA Loans and Credit Score and Credit History For manually underwritten loans, the USDA requires a 640 "middle" credit score, although, there are exceptions: Credit score less than 640 According to the USDA underwriting guidelines, underwriters (that's the approval person), must perform a cautious level of underwriting. A detailed review of all aspects of the applicant's credit history should be examined to establish the applicant's willingness to repay and ability to manage obligations as agreed. Unless there are extenuating circumstances documented in accordance with this Chapter 10, a credit score in this range is generally viewed as a strong indication that the applicant does not have an acceptable credit reputation. Little or no credit history: The lack of credit history on the credit report may be mitigated if the applicant can document a willingness to pay recurring debts through other acceptable means such as third party verifications or canceled checks. Due to impartiality issues, third party verifications from relatives of household members are not permissible. Lenders can develop a Non-Traditional Credit Report for applicants who do not have a credit score in accordance with Paragraph 10.6 of this Chapter Indicators of unacceptable credit The following indicators require documentation meeting the criteria of Section 10.8 to approve an applicant's loan request for manually underwritten loans: • Foreclosure within 3 years: Including pre-foreclosure activity, such as a pre-foreclosure sale or short sale in the previous 3 years (refer to Attachment 10-B for additional guidance); • Bankruptcy within 3 years: • Chapter 7 bankruptcy discharged in the previous 3 years; • An elapsed period of less than 3 years, but not less than 12 months, may be acceptable if the applicant meets the criteria of Section 10.8 of this Chapter. • Chapter 13 bankruptcy that has yet to complete repayment (repayment plan in progress) or has completed payment in the most recent 12 months. • Plans that are completed for 12 months or greater do not require a credit exception in accordance with Section 10.8; • Late mortgage payments if any mortgage trade line during the most recent 12 months shows 1 or more late payments of greater than 30 days. • Late rent payments paid 30 or more days late within the last 12 months. Read more about USDA credit requirements in Chapter 10 including bankruptcy, foreclosure and short sale acceptance USDA Qualifying Areas The home must be located in a USDA defined area. The USDA provides a lookup tool to determine whether the house is located in a USDA designated location. USDA area eligibility lookup The property must be predominately residential in character, use, and design. The home may be attached, detached or semi-detached and must meet the current minimum USDA property guidelines. Site Size There is no specified limitation to the acreage/size of the lot. A home with excessive acreage that represents a cost greater than a similar home with less acreage may not be acceptable. The appraiser must provide an addendum to the appraisal with an explanation to adjustments to comparable properties. Income Producing Buildings The property must not include buildings principally used for income-producing purposes. Barns, silos, commercial greenhouses, or livestock facilities used primarily for the production of agricultural, farming or commercial enterprise are ineligible. However, barns, silos, livestock facilities or greenhouses no longer in use for a commercial operation, which will be used for storage do not render the property ineligible. Outbuildings such as storage sheds and non-commercial workshops are permitted if they are not used primarily for an income producing agricultural, farming or commercial enterprise. A minimal income-producing activity, such as maintaining a garden that generates a small amount of additional income, does not violate this requirement. Home-based operations such as childcare, product sales, or craft production that do not require specific commercial real estate features are not restricted. Additional property eligibility can be found in Chapter 12 Property And Appraisal Requirements Chapter 12 also addresses potable and waste water systems, street access and road maintenance. PHFA and USDA The USDA loan program is accepted by the Pennsylvania Housing Finance Agency (PHFA) under the Keystone Government Loan Program. The benefit of the Keystone government loan is a lower interest rate and access to the Keystone Assistance Program (subject to PHFA guidelines). The maximum assistance loan is 4% of the sales price up to $6,000. There are no first time home buyer requirements with either the Keystone Government program or the Keystone Assistance program.