Ohio USDA Loan Requirements: A Complete Guide

As mentioned, the USDA does have limitations on what homes are eligible for their No Down Payment Program. The USDA essentially has two requirements for Home Eligibility: Property Location and Property Condition.

The property must be free of major repairs. The USDA uses a licensed Appraiser as their eyes on the property. If the appraiser notices any items listed below, they will require that these items be corrected prior to closing.

The USDA loan program offers many benefits for homebuyers in rural and suburban areas of Ohio USDA loans require no down payment and have very flexible credit requirements However, there are income limits and property eligibility requirements you need to meet to qualify for a USDA loan in Ohio. This complete guide covers everything you need to know about Ohio USDA loan requirements.

Overview of USDA Loans

The US Department of Agriculture (USDA) offers home loans to help low- and moderate-income homebuyers in rural and suburban areas purchase homes. USDA loans offer 100% financing, so no down payment is required. They also have flexible credit requirements and low interest rates.

Some key features of USDA loans:

  • 100% financing – No down payment required
  • Low interest rates
  • Low mortgage insurance rates
  • Flexible credit requirements
  • No maximum income limits

To be eligible, the home you wish to purchase must be located in an eligible rural or suburban area. The USDA has an eligibility tool you can use to check if a specific property qualifies.

Ohio USDA Income Limits

While there are no maximum income limits for USDA loans nationally, each state has its own income eligibility guidelines. In Ohio here are the current income limits to qualify for a USDA loan

  • Low-income limit: $60,900 for a 1-2 person household, $79,900 for a 3+ person household
  • Very low-income limit: $38,000 for a 1-2 person household, $49,200 for a 3+ person household

So your household income must be equal to or lower than the applicable limits for your family size to qualify for a USDA home loan in Ohio. The very low-income limits qualify for the best terms and interest rates.

Ohio USDA Home Eligibility

In addition to meeting the income guidelines, the home you wish to purchase with a USDA loan in Ohio must meet certain property eligibility requirements:

  • Location: The home must be located in an eligible rural or suburban area as designated by the USDA eligibility tool. Generally, cities with populations under 35,000 qualify.

  • Home types: Single family homes, townhomes, and condos are eligible. Mobile and manufactured homes may also qualify if they meet guidelines.

  • Maximum value: The purchase price of the home must be below the limit for the county where the property is located. Check with your lender on the exact limit.

  • Occupancy: You must make the home your primary residence and occupy the property within 60 days of closing.

The USDA has additional requirements regarding the condition, access, project approval, and existing debt for properties. A lender can advise you on all the property eligibility guidelines.

Ohio USDA Loan Application Requirements

When applying for a USDA home loan in Ohio, here are some key requirements to be prepared for:

  • Credit score: No minimum credit score, but typically a score of 640+ recommended. Lower scores may require a larger down payment.

  • Debt-to-income ratio: Your total monthly debt payments, including the new mortgage, should not exceed 41% of your gross monthly income.

  • Stable income: You must have a consistent income source and employment history. Two years on the job is recommended.

  • Credit history: Any major credit problems should be resolved before applying. Limited previous credit is OK.

  • Cash reserves: No specific cash reserve requirement, but having a few months of mortgage payments in savings is recommended.

  • Citizenship: You must be a U.S. citizen, U.S. non-citizen national, or Qualified Alien.

Documents Needed for Ohio USDA Loan

When applying for a USDA home loan in Ohio, here are some of the documents you’ll need to provide:

  • Loan application with personal information
  • Federal tax returns for last 2 years
  • W-2s and paystubs covering last 30 days
  • Bank statements for last 2 months
  • Debt and asset documentation
  • Veterans only – DD Form 214 Certificate of Release or Discharge from Active Duty
  • Identity verification (photo ID, Social Security cards, etc.)

Finding an Ohio USDA Loan Lender

USDA home loans are provided by approved mortgage lenders across the state. Some lenders to consider for USDA loans in Ohio include:

  • Fairway Independent Mortgage
  • NOVA Home Loans
  • Eagle Home Mortgage
  • CrossCountry Mortgage
  • Your local community banks and credit unions

Getting loan estimates from multiple lenders is recommended so you can shop around for the best rates and fees. Pre-approval is also advised so you can shop with confidence.

The USDA Loan Process in Ohio

If you meet the eligibility requirements, here is a general overview of the USDA loan process in Ohio:

  1. Get pre-approved: Submit your application and documents so the lender can evaluate your eligibility. This shows sellers you are serious.

  2. Find a home: Work with a real estate agent to find a home in your budget that meets USDA requirements.

  3. Make an offer: Make an offer once you find the perfect home!

  4. Home inspection: Get an inspection to ensure there are no major issues with the property.

  5. Appraisal: The lender will order an appraisal to ensure the value matches the sale price.

  6. Loan approval: The lender issues a formal loan approval and commitment letter.

  7. Closing: Final documents are signed, the loan closes, and you get the keys!

The entire process usually takes 30-60 days in Ohio. Having all your financials and documents ready will help speed things along.

Benefits of a USDA Home Loan in Ohio

USDA loans offer homebuyers in Ohio many advantages:

No down payment required – This helps immensely with affordability

Below-market interest rates – USDA rates are very competitive

Low monthly mortgage insurance – Just 0.35% of the loan amount

No maximum income limits – You can qualify no matter your income

Flexible credit guidelines – Lower credit scores may be approved

No required cash reserves – Helps first-time home buyers

✔ Can finance closing costs into the loan

If you want to buy a home with little money down, USDA loans are a great option in Ohio. They provide an affordable path to homeownership for rural and suburban residents across the state.

Is a USDA Loan Right for You?

While USDA loans offer nice benefits for buyers, make sure you consider these key points when deciding if it’s the right loan program for you:

  • Will the property meet location and eligibility rules? Check the USDA site.

  • Is your income within the limits based on your household size?

  • Are you prepared to occupy the home as your primary residence?

  • Are you comfortable with the moderate upfront costs at closing?

  • Do you plan to live in the home long-term? USDA loans charge fees if you sell within 5 years.

If you can answer “yes” to the above, a USDA loan may be a great fit! Connect with lenders to ask additional questions and get pre-approved today.

The home must be in a USDA Approved Geographic Region

The USDA Mortgage Program is also known as the USDA Rural Development Program. All rural areas of Ohio are eligible for the program. A surprising number of towns and suburbs of metro areas are eligible too. Basically, unless you live within the city limits of a sizable Ohio city, it is worth a look to see if the property you wish to purchase is eligible for the No Down Payment USDA Mortgage. Eligibility is determined on a County wide basis.

To determine if your home or potential home is eligible for the USDA program choose your County from the Eligible Counties link in the Navigation Menu.

Buying a House Using USDA Rural Development Loan ($1,000 DOWN)

FAQ

What is the income limit for a USDA loan in Ohio?

Eligibility Requirements – Ohio For a family of 1-4 in Ohio, the average household income limit for a USDA loan is about $110,650 a year, and for a family of 5 or more the limit can be as high as $177,000.

How high does your credit score need to be for a USDA loan?

What is the minimum credit score for a USDA loan? Approved USDA loan lenders typically require a minimum credit score of at least 620 to get a USDA home loan. However, the USDA doesn’t have a minimum credit score, so borrowers with scores below 620 may still be eligible for a USDA-backed mortgage.

What counties in Ohio qualify for USDA loans?

SERVICE AREA: Adams, Brown, Butler, Champaign, Clark, Clermont, Clinton, Darke, Fayette, Franklin, Greene, Hamilton Highland, Lawrence, Madison, Miami, Montgomery, Pickaway, Pike, Preble, Ross, Scioto & Warren Counties.

Can you have a USDA and FHA loan at the same time?

Program rules typically limit you to having one FHA or USDA loan at a time.

What are the benefits of USDA home loans in Ohio?

The primary benefit of USDA Home Loans in Ohio is that they offer 100% financing, meaning that borrowers do not have to make a down payment. They also have fixed interest rates and lower credit score requirements compared to conventional loans.

What are the requirements for a USDA loan?

Some general requirements, however, apply to all USDA loans, specifically those based on both buyer and property eligibility. Eligible rural area: The USDA defines an eligible area as having a population of 20,000 or fewer. Check the USDA’s eligibility site or the map below.

Is a Ohio USDA home loan a good fit?

If you’re purchasing a home in a rural area in the state of Ohio with a population of less than 35,000, and looking for a home in a qualifying suburban town that is located outside of city limits, a Ohio USDA home loan may be a good fit for you!

What is a USDA home loan?

USDA Home Loans, also known as Rural Development mortgages, are backed by the United States Department of Agriculture and offered through approved lenders, banks, and brokers. The program is designed to help low to moderate-income households purchase homes in rural-defined locations in the U.S.

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