A USDA mortgage provides low cost, low rate, insured home mortgages for people looking to become home owners in rural areas. USDA mortgages are specifically designed for individuals with moderate to low incomes and are perfect for individuals recently getting out of school. Because recent college graduates generally have moderate to low income levels, many of them can qualify for a low interest USDA mortgage. And one of the best parts about the USDA home mortgage program is that they require no money down. They are the only home mortgage program, besides mortgage programs through the military, that require absolutely no money down.
How to Qualify
Qualifying for a USDA mortgage is easier than you think and are perfect for recent college graduates looking to buy their first home. Because USDA mortgages are designed for low income individuals, if you make too much money you can actually be disqualified. This is perfect for college students just starting out with their first job out of school. If you make below 115% of the area median income, you will be eligible for a USDA mortgage. Also, if you make below 50% of the area median income you may be eligible for a USDA Direct mortgage, which typically offers lower rates over a longer period of time. To qualify you must also have a credit score above 580, have a steady income, and your property must be in a rural area or small town of less than 20,000.
If your student loans are above a certain percentage of your total gross income, you may need to file for a debt ratio waiver request. Debt ratio waiver requests are only needed in certain circumstances where the student has a high debt ratio, typically due to student loans and accumulation of previous debt. The USDA will look at several qualifying factors to determine if you qualify for a debt ratio waiver. These will include a credit score above 660, has demonstrated a conservative use of credit, cash reserves in the bank or 401 K, stable employment for two years, potential for increased income, to name a few. To get more information on whether you qualify for a USDA mortgage contact a USDA mortgage representative in your area.