The USDA home loan program provides an excellent opportunity for eligible homebuyers in Nevada to purchase a home with little to no down payment. Known formally as the Section 502 Direct Loan Program, USDA home loans offer 100% financing and flexible underwriting to make homeownership attainable for low- and moderate-income buyers in rural areas.
In this comprehensive guide, we’ll cover everything you need to know about getting a USDA home loan in Nevada, including:
- USDA Loan Overview
- Nevada USDA Loan Limits
- Eligibility Requirements
- The Application Process
- Loan Terms and Conditions
- Why Choose a USDA Loan?
Overview of USDA Home Loans
USDA home loans are government-backed mortgages issued by approved lenders and guaranteed by the United States Department of Agriculture (USDA) These loans provide a no down payment option for eligible homebuyers in designated rural areas across the country
Some key features of USDA loans include
- 100% financing – no down payment required
- Low interest rates and flexible terms
- No monthly mortgage insurance required
- More relaxed credit standards than conventional loans
- Can be used to build, purchase, improve or refinance a home
USDA loans help lower income households achieve homeownership by providing an affordable financing option. When paired with the USDA Single Family Housing Repair program, buyers can also access grants and loans to repair or improve their newly purchased home.
Nevada USDA Loan Limits
The maximum loan amount you can borrow with a USDA loan depends on which county in Nevada the home is located in. USDA loans limits align with FHA loan limits, which vary by county based on median home prices in the area.
Here are the current USDA (and FHA) loan limits for Nevada counties:
- Clark County: $420,680
- Washoe County: $420,680
- Carson City County: $420,680
- Douglas County: $420,680
- Elko County: $420,680
- Lyon County: $420,680
All other eligible rural counties in Nevada fall under the floor loan limit of $419,000.
You can lookup exact loan limits by county on the USDA eligibilty website here.
USDA Loan Eligibility Requirements
To qualify for a USDA home loan in Nevada, there are certain eligibility requirements you must meet relating to your income, home location, creditworthiness and repayment ability:
Income Limits
Your total household income must be below the income limit set by USDA for your area:
- Clark County: $77,500 for a family of 4
- Washoe County: $69,300 for a family of 4
- Other Counties: Varies, lookup here
Income limits do adjust based on household size. Refer to the income limit map linked above for your specific county and household size.
Home Location
The home you wish to purchase must be located in a rural area designated as eligible for USDA financing. You can verify if a property qualifies by looking it up on the USDA eligibilty website here.
Generally, eligible rural areas have populations below 35,000. In Nevada, this includes smaller towns and communities outside of the main metro areas.
Credit History
USDA loans are available to borrowers with credit scores as low as 640. They will review your full credit profile, but can be more flexible than conventional loans in approving applicants with past credit issues.
Repayment Ability
You must demonstrate sufficient income to afford the new mortgage payment along with your other monthly debts. Typically, your total debt-to-income ratio should be below 41% to qualify.
USDA also requires you to have a steady income history and adequate cash reserves. Two months of mortgage payments in reserves is recommended.
Other Requirements
To qualify for a USDA home loan, you must:
- Be a U.S. citizen or permanent legal resident
- Have your finances in order – no recent bankruptcy or foreclosure
- Occupy the home as your full-time primary residence
- Not exceed the USDA loan limit for your area
- Be unable to secure traditional mortgage financing
Meeting with a local USDA approved lender is the best way to determine if you fully meet eligibility requirements for a USDA home loan in your area.
How to Apply for a USDA Home Loan in Nevada
Here is an overview of the application and approval process for getting a USDA home loan in Nevada:
1. Check Eligibility
Go to the USDA eligibility tools linked above to verify you meet the income limit and property location requirements.
2. Get Pre-Qualified
Work with a USDA approved lender to assess your credit, income and debts. They will help you get pre-qualified for a loan amount.
3. Choose a Home
Once pre-qualified, you can start home shopping! Only look at homes in eligible rural areas that are within your pre-approval amount.
4. Make an Offer
When you find the perfect home, make an offer contingent on USDA loan approval. This secures the home while giving time to complete the full application.
5. Complete Loan Application
Provide all required documents to your lender – pay stubs, tax returns, bank statements to verify your eligibility.
6. Home Appraisal
USDA will send out an appraiser to evaluate the home’s value compared to your purchase price.
7. Loan Approval
It takes approximately 30-60 days to process an application. Once approved, you’ll receive a closing disclosure outlining your loan terms.
8. Home Inspection
Hire an inspector to evaluate the condition of the home prior to closing. Needed repairs can be negotiated with the seller.
9. Closing & Move In!
At closing, you’ll sign the final loan documents and receive the keys! Then it’s time to move into your new USDA-financed home.
Reaching out to USDA lenders early in the home buying process is key to ensure you start in the right place to qualify for affordable financing.
USDA Loan Terms & Conditions
USDA home loans offer more flexible terms than conventional mortgages, making them easier to afford:
- Interest Rates: Currently around 4.75% with no points or fees
- Loan Term: Up to 38 years for very low income borrowers
- Downpayment: None required
- Mortgage Insurance: No monthly mortgage insurance payments
USDA loans can be used to purchase an existing home or build a new home on land you already own. You can also utilize USDA financing to improve or repair an existing home using the Single Family Housing Repair program.
When you apply, the lender will help determine the optimal loan amount and repayment terms based on your financial situation and goals.
One unique condition of USDA loans is the recapture provision. This requires repayment of a portion of subsidy received if you sell the home within 15 years of closing. The amount owed decreases gradually over time.
Why Choose a USDA Home Loan?
Here are some of the biggest benefits that make USDA loans a top financing option for Nevada homebuyers:
Affordability
The 100% financing, low rates, and 30+ year terms provide very affordable monthly mortgage payments without requiring Private mortgage insurance.
Ideal for First-Time Homebuyers
Relaxed credit standards and no downpayment provide the opportunity to purchase your first home sooner.
Purchase in Rural Areas
Buy a home in the smaller and more affordable towns around Nevada.
Lower Income Friendly
Higher income limits than conventional loans allow more lower- and middle-income families to qualify.
Support Local Economy
USDA loans keep money local by enabling residents to purchase homes in rural communities.
Customized Loan Options
USDA lenders can tailor loan amounts and terms to each borrower’s unique financial situation.
Refinance and Repair Assistance
Use USDA loans to lower your rate and payment on an existing home through refinancing. Their repair programs can also help update and improve your property.
Overall, USDA home loans expand home buying possibilities through flexible financing that fits a wider range of buyer profiles. Connecting with an approved USDA lender is the first step to determine if this government-backed mortgage program is right for your needs in Nevada.
Common Questions About USDA Home Loans
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What are the qualifications for USDA home loans?
Because loans from the USDA are so specific to the type of property they cover, there are a few key things to know about how these mortgages work. In the section below, we discuss which borrowers and property types are eligible for USDA loans.
- Location: The USDA has created specific Rural Housing zones for these types of loans. You can explore their eligible area map, and your dedicated Mortgage Consultant can help you further determine eligibility when you apply.
- Residency: USDA loans are for primary residences only. They are not designed for second or vacation homes.
- Income: A borrower’s income can not exceed 115% of the median household income for the area in which the borrower is considering purchasing.
- Credit score: Generally, borrowers should have a minimum 640 FICO credit score, but those with scores between 600 and 640 may go through more thorough manual underwriting to qualify.
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What’s the difference between USDA and conventional home loans?
Unlike conventional loans, USDA loans must be for primary residences only, and the property must fall within a designated Rural Housing zone. Loans can be up to 102% of the home’s appraised value or sale price, and no down payment is required. Buyers must fall within a certain income threshold to qualify and there is no requirement to purchase additional private mortgage insurance (PMI).
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What is the difference between a USDA loan and FHA loan?
USDA loans differ from FHA loans in several key ways. While both are backed by governmental agencies, FHA loans limit the amount you can borrow for your home purchase. Also, during the appraisal process, homes being considered for USDA eligibility must meet certain zoning requirements, whereas FHA loans require the property to meet certain Housing Urban Development (HUD) standards. USDA loans do not require down payments, while FHA loans can require up to 3.5% down. In both cases, the buyer may be responsible for paying closing costs, but with a USDA loan, buyers may borrow enough money to cover the closing costs above and beyond the purchase price. Learn more about the different types of home loans offered at Greater Nevada Mortgage.
Apply for a USDA Home Loan
If you are considering purchasing a property in a designated rural area in California or Nevada, Greater Nevada Mortgage can help you realize your dream. See how.
Nevada USDA Home Loan Program, Who Does it
FAQ
What is the income limit for a USDA loan in Nevada?
Is USDA easier to get than FHA?
What are the pros and cons of a USDA loan?
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Pros
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Cons
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No down payment
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Income limits
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Competitive interest rates
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Property restrictions
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Relaxed credit requirements
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Occupancy requirements
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No PMI requirement
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USDA program fees
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How high does your credit score need to be for a USDA loan?
What is a USDA loan & how does it work?
Unlike conventional loans, USDA loans must be for primary residences only, and the property must fall within a designated Rural Housing zone. Loans can be up to 102% of the home’s appraised value or sale price, and no down payment is required.
How do I qualify for a USDA loan?
– The home you intend to purchase must be located in an eligible rural area as defined by the USDA. 2.**Residency and Citizenship**: – You must be a **U.S. citizen**, a **permanent resident**, or an
Do all applicants qualify for a mortgage loan in Nevada?
Not all applicants will qualify. Home At Last™, Home Means Nevada Rural DPA, Buy in Nye, and Mortgage Credit Certificate (MCC) are programs of Nevada Rural Housing and separate guidelines will apply for each program. Nevada Rural Housing does not originate mortgage loans or determine eligibility.
What is a DPA loan in Nevada?
Home Means Nevada Rural DPA Program: 3-year term with no interest and no payments Assistance is forgiven at the end of the 3-year term (not prorated) or December 31, 2026, whichever occurs first First Mortgage Details All Programs: All first mortgages are for a term of 30 years with a fixed rate established by Nevada Rural Housing