The USDA home loan process is very similar to that of a conventional mortgage from a bank or private lender. The only real difference between the two is that your USDA Home Loan is submitted to your states USDA Field Office instead of a traditional bank or mortgage lender. Once you are done filling out the proper paperwork your mortgage lender underwriting the file with submit the loan to the USDA Field Office where they will review the loan for final approval. Once the field office has completed it’s review the client will be notified if they are eligible for the loan, and if so, will set up a time to review and sign the necessary documents.
If the agency or office your working with does not have some form of Pre-Qualification application, then they will begin the standard USDA loan application process. Here they will review your file and determine if you meet all the USDA eligibility guidelines. These will include property eligibility, credit eligibility and income eligibility guidelines. For your property to be eligible it must be located in a rural area or a town with a population of less than 20,000 residents. Also, your income must be less than 115% of the US median income in that county. And finally, they will review your credit information and current income to make sure you are capable of repaying back the loan.
Once you are notified you are eligible for a USDA home loan you will lock in the current interest rate and order a home appraisal. Once the home appraisal is completed, you will need to gather all remaining underwriting items and prepare your file for a underwriters review. Once these items are gathered your lender will underwrite the USDA loan and submit it to your local USDA Regional field office for final approval.
At the USDA local field office your loan will be thoroughly reviewed and all your credit and financial information will be taken into consideration. This verification process can take as little as two days to two weeks, depending on the number of USDA loans currently being processed. The USDA will then decide whether to approve or reject your loan request. If approved, your lender will draw up the necessary documentation and your loan will typically fund the same day of signing.