Everything You Need to Know About USDA Home Loans in Georgia

USDA home loans are an excellent option for homebuyers in rural parts of Georgia looking for affordable financing. These government-backed mortgages offer significant benefits like low and no down payment options, low interest rates, and flexible credit requirements. If you’re considering buying a home in Georgia, a USDA loan could be the ideal choice to make homeownership affordable.

In this comprehensive guide, we’ll cover everything you need to know about USDA loans in Georgia, including:

• Overview of USDA Loan Programs in Georgia
• Benefits of USDA Loans
• Eligibility Requirements
• How to Apply
• Loan Limits and Down Payment Options
• Interest Rates and Terms
• Credit Score Requirements
• Loan Fees
• Homebuyer Education Requirements
• Finding a USDA-Approved Lender in Georgia

Whether you’re a first-time homebuyer or looking to move up to your dream home, read on to see if a USDA mortgage is the right fit for you

Overview of USDA Loan Programs in Georgia

The United States Department of Agriculture (USDA) offers two main types of home loans in Georgia:

USDA Direct Loans

USDA direct loans are funded directly by the USDA Rural Development office. These loans are targeted at very low and low-income buyers.

Direct USDA loans offer

• 100% financing
• Below market interest rates
• 33-38 year loan terms

USDA Guaranteed Loans

Guaranteed loans are issued by private lenders but guaranteed by the USDA They target moderate income buyers

Guaranteed USDA loans offer:

• 100% financing
• Competitive interest rates
• 30 year loan terms

Guaranteed loans make up the majority of USDA mortgages in Georgia.

Throughout this guide, we’ll explore the key details and benefits of both USDA loan programs in Georgia.

Benefits of USDA Home Loans in Georgia

USDA mortgages offer homebuyers several advantages over conventional loans:

100% Financing with No Down Payment

The #1 benefit of USDA loans is that they require no down payment. This makes them extremely attractive for first-time homebuyers and buyers with limited savings.

With a conventional loan, you typically need a 20% down payment to avoid private mortgage insurance (PMI). With a USDA loan, you can buy a home with 0% down and no PMI.

Below Market Interest Rates

Thanks to their government backing, USDA home loans offer lower interest rates compared to conventional mortgages. This results in a lower monthly payment and long-term savings.

As of June 2024, interest rates for Georgia USDA loans are:

• Direct Loans: As low as 1% with payment assistance
• Guaranteed Loans: Competitive fixed rates in line with conventional loans

Low Monthly Mortgage Insurance

USDA loans require an upfront guarantee fee and monthly mortgage insurance just like FHA loans. However, USDA mortgage insurance is significantly cheaper than both FHA and conventional loans.

This results in lower monthly payments for buyers.

Flexible Credit Requirements

USDA loans are available to buyers with credit scores as low as 620. They can be an option for buyers who don’t quite qualify for conventional financing.

That said, the stronger your credit, the better your interest rate will be. For the lowest rates, aim for a score of 720 or above.

Long Repayment Terms

USDA direct loans offer repayment terms up to 38 years for very low-income buyers. This results in more affordable monthly payments.

Guaranteed loans have 30 year terms, just like conventional mortgages.

Ability to Finance Closing Costs

With a USDA loan, sellers can contribute up to 6% of the purchase price to help buyers pay for their closing costs and prepaid expenses.

This allows buyers to finance 100% of the home purchase without having to pay anything out of pocket.

Eligibility Requirements for USDA Loans in Georgia

To qualify for a USDA home loan in Georgia, you must meet certain borrower, property, and income eligibility requirements:

Borrower Eligibility

To qualify for a USDA mortgage, borrowers must:

• Have a credit score of at least 620
• Have stable income and employment history
• Show ability to repay the mortgage
• Be a U.S. citizen, permanent resident, or qualified non-permanent resident
• Agree to personally occupy the home as your primary residence

Property Eligibility

The home you wish to buy must be located in a USDA-designated rural area. Fortunately, much of Georgia outside the metro Atlanta, Augusta, Columbus, and Macon areas qualifies.

You can easily check property eligibility using the USDA Property Eligibility tool.

Other property requirements include:

• Single family home, townhome, or condo
• Main residence, not a vacation or investment property
• Modest in size, design, and cost

Income Eligibility

Your household income must be below the income limits set by USDA for your county. Income limits range from $60,000 to $115,000 depending on your family size and location.

You can look up income limits by county using the USDA Income and Property Eligibility tool.

How to Apply for a USDA Home Loan in Georgia

If you’ve determined you’re eligible, follow these steps to apply for a USDA mortgage in Georgia:

1. Find a USDA-Approved Lender

You can’t apply for a USDA loan directly through the USDA. You must apply through an approved lender. We’ll cover how to find a lender later in this guide.

2. Get Pre-Approved

Work with your lender to get pre-approved. This involves submitting documents to confirm your income, assets, employment, and credit history.

Getting pre-approved gives you a realistic price range and demonstrates serious buying power to sellers.

3. Make an Offer

Once pre-approved, you can confidently make an offer on a USDA-eligible home in your price range.

Submit your offer along with a pre-approval letter from your lender.

4. Complete the Full Application

After an offer is accepted, your lender will guide you through the full application. This includes paperwork verifying your eligibility, income, employment, assets, and credit.

You’ll also have a home appraisal done and get homeowners insurance quotes.

5. Close on Your USDA Loan

The final step is closing on your new home! This involves a final review of your application, signing closing documents, and transferring funds.

Then you can pick up the keys and move into your new home!

USDA Loan Limits and Down Payment Options in Georgia

When getting a USDA loan, two key factors that impact the amount you can borrow are the loan limits and down payment requirements.

Loan Limits

USDA does not have statewide loan limits. Instead, loan limits are determined by county and adjusted annually.

For 2024, loan limits range from around $300,000 to just over $500,000 throughout Georgia. You can look up the exact limit for your county here.

The good news is, in most of rural Georgia, USDA loan limits are high enough to buy a nice single family home.

Down Payment

The minimum down payment for a USDA loan is 0%. However, buyers have a few down payment options:

• 0% down: This is the most popular option. You can finance 100% of the purchase price plus closing costs.

• 3.5% down: On guaranteed loans, some buyers choose to make a small down payment to get a lower interest rate.

• Up to 10% down: Buyers can make a down payment of up to 10% if they have the funds. This reduces the amount borrowed but does not change your interest rate.

Always choose the option that best fits your financial situation. The 0% down payment program makes USDA loans affordable for most buyers.

Interest Rates for USDA Loans in Georgia

USDA home loans feature very competitive interest rates thanks to their government backing. Here are the current rates as of June 2024:

USDA Direct Loans:

• 1% interest rate with payment assistance
• Fixed rates as low as 4.75% for low to very low income borrowers

USDA Guaranteed Loans:

• Fixed rates in the 4.5% to 7% range
• Rates are in line with conventional mortgage rates

Within those ranges, your individual interest rate will depend on factors like your credit score, debt-to-income ratio, and whether you make a down payment.

To get the lowest rate, maintain a credit score over 700 and limit your total debt. Your lender can help advise you on getting the best deal.

USDA Loan Terms, Fees, and Costs in Georgia

When getting