Buying a home is an exciting milestone in life. However it can also be challenging especially when it comes to financing. That’s where USDA home loans in Georgia can help.
USDA home loans also known as Section 502 loans are mortgage loans insured by the US Department of Agriculture (USDA) and aimed at helping low- and moderate-income families living in rural areas buy a home.
In this comprehensive guide, we’ll explain everything you need to know about USDA loans in Georgia – from eligibility requirements, benefits, and interest rates to the application process. Let’s get started!
What are USDA Loans?
USDA home loans are government-backed mortgages designed to promote homeownership in rural areas. The USDA partners with approved lenders to offer these loans with favorable terms to eligible homebuyers.
Some key things to know about USDA loans:
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Purpose: Help low- to moderate-income borrowers buy homes in rural locations.
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Backed by: US Department of Agriculture.
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Offered through: USDA-approved lenders.
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Features: Fixed low interest rates, low down payments, flexible credit requirements.
So in a nutshell, USDA loans help rural residents who may not qualify for conventional mortgages become homeowners with affordable financing.
USDA Loan Benefits
USDA home loans offer many perks that make them appealing to eligible borrowers. Here are some of the top benefits:
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Low interest rates – USDA loans feature fixed interest rates that are very competitive, currently starting around 4.75%.
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Low down payments – You can get a USDA loan with zero down payment. No 20% down required!
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Less strict credit standards – USDA has more flexible credit requirements than conventional loans. Minimum 580 FICO score.
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No monthly mortgage insurance – Unlike other low down payment loans, USDA loans don’t require monthly PMI.
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No prepayment penalties – You can pay off your USDA loan early with no extra fees or penalties.
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33-38 year loan terms – Get more time to pay off your mortgage.
As you can see, USDA home loans offer significant advantages that help ease the path to homeownership.
USDA Loan Requirements
While USDA loans are easier to get than conventional mortgages, you still need to meet certain eligibility standards to qualify. Here are the basic USDA loan requirements:
Borrower Requirements
- Minimum 580 credit score
- Sufficient income and repayment ability
- Complete credit and background check
- Debt-to-income ratio typically under 41%
- Citizenship or eligible legal residency
Property Requirements
- Located in eligible rural area
- Single family home, condo/townhome, manufactured home
- Main residence (not vacation home)
- Appraised value under loan limits
- Home inspections/appraisals conducted
Income Limits
- Vary by county, adjusted for household size
- Check USDA income eligibility maps
Meeting these criteria is key to getting approved for a USDA home loan. Work with a USDA lender to confirm your eligibility.
How Do USDA Loans Work?
USDA home loans work like other mortgage loans, with a few distinct differences:
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You apply through USDA-approved lenders who process the loan.
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If approved, the USDA guarantees the mortgage, providing the backing.
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The lender funds and closes the loan, then typically sells it to the USDA or Ginnie Mae.
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You make your mortgage payments directly to a mortgage servicer.
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If you default, the USDA pays the lender, protectin them from losses.
So while you work with private approved lenders, the USDA guarantees these loans, making them much more accessible to borrowers.
USDA Loan Interest Rates
USDA mortgages come with fixed interest rates that are very competitive:
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As of June 1, 2024, the interest rate is 4.75% for low-income borrowers.
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For very low-income borrowers, rates can be between 1-4.75% when subsidized.
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The rate is set when your loan closes, and will never change.
Always check current USDA loan rates, but you can count on very low fixed rates vs conventional mortgages. This results in lower monthly payments.
USDA Loan Limits
USDA home loans come with limits on the amount you can borrow. Loan limits vary by county, based on median home prices in the area.
Some current loan limits for counties in Georgia include:
- Fulton County: $386,500
- Gwinnett County: $332,500
- Dekalb County: $331,900
- Cobb County: $331,900
You can check loan limits for any county just by searching for it on USDA’s eligibility site. The loan limits adjust annually.
How to Apply for a USDA Home Loan
Ready to move forward with a USDA loan? Here is a step-by-step overview of the application and approval process:
1. Check your eligibility. Use USDA’s online tool to verify you meet the income limits and property is in an eligible area.
2. Find a USDA lender. Connect with a lender approved to offer USDA loans. Many banks and credit unions offer them.
3. Submit loan application. Provide all required documents and complete the full mortgage application.
4. Get pre-approved. The lender will pre-approve you if you seem to meet requirements.
5. Shop for homes. Once pre-approved, you can start searching for eligible houses to buy.
6. Make an offer. When you find the right home, make an offer contingent on financing.
7. Complete underwriting. Provide updated docs for full underwriting approval after offer accepted.
8. Close on your USDA loan. Final step is closing on your mortgage and getting the keys!
While every lender has their own process, these are the basic steps to getting a USDA-backed mortgage.
Alternatives to USDA Loans
USDA loans are a great option for rural borrowers. But what if you don’t qualify? Here are a few alternative home loans to consider:
FHA loans – Popular low down payment government-backed loans with flexible credit requirements.
VA loans – Zero down payment mortgages for veterans and military members.
Conventional 97 – 3% down mortgages backed by Fannie Mae or Freddie Mac.
Down payment assistance – State and local programs that provide grants for down payments.
Subsidized mortgages – State and local programs with subsidized first mortgages for low-income buyers.
Owner financing – Some sellers provide their own in-house financing.
Be sure to shop multiple mortgage programs and compare costs to find the best fit if USDA loans don’t work for you.
The Bottom Line
USDA home loans provide a great opportunity for eligible borrowers to purchase a home with affordable financing. Key takeaways:
- Offered in rural areas to low/moderate income buyers
- Require low credit scores and down payments
- Feature subsidized low fixed interest rates
- Guaranteed by USDA, no PMI required
- Work with USDA approved lenders to apply
Hopefully this guide gave you a complete overview of USDA loans in Georgia! They provide a viable path to homeownership for rural residents across the state.
Step 1 of 10
The time to buy a house in Georgia has never been better! Residents of Georgia have a fantastic opportunity for a home loan from the USDA. For a USDA home loan in Georgia, the average income limit for a family of 1-4 is $110,650. For a family of 5 or more, this limit can be as high as $146,050. To find out more, just fill out the form below and one of our USDA loan specialists will follow up and help you get into the great new home that’s waiting for you.
The map below shows the areas of Georgia eligible for a USDA loan. To see if your area qualifies, head over to the USDA property eligibility screen.
Below you will find a link to the USDA income limits for Georgia:
- NO down payment – Finance 100% of your home
- NO maximum loan amount in Georgia.
- NO assets needed to qualify
- Flexible credit guidelines
- Competitive, fixed interest rates so payments do not increase
- USDA Loans are for new and existing properties
Start your Georgia USDA home loan now! Just fill out this quick form to get started & a USDA loan specialist will contact you with your options.
What areas are eligible?
Need a 620 credit score
USDA Loans .Net requires a middle credit score of at least 620. If you are close, apply and we can help.
5 Things You Need to Know About USDA loans
FAQ
What is the income limit for USDA in Georgia?
What credit score do you need for a USDA loan in Georgia?
Is it easier to get FHA or USDA?
What is the most you can borrow from an USDA loan?
How many USDA backed home loans are there in Georgia?
There are 28,590 USDA backed residential loans in Georgia with an average loan balance of $109,593. Over 84% of the loans went to help first time home buyers. Borrowers were an average age of 37 years old. The typical appraised home value was around $111,807.
How do I get a home loan in Georgia?
To be approved for this loan there are a few important requirements: First, the home must be located in a USDA eligible area. Again, most of GA outside major cities is approved for the program. If you find your location is not eligible, please contact us to discuss different low-down payment solutions like an FHA mortgage.
Are USDA Loans a good option for first-time home buyers?
Please see the USDA map snapshot for Georgia, the darker shaded areas are the ineligible locations. Buyers can use the address lookup tool and see the complete USDA map here. USDA loans are especially a good program for first-time home buyers that have little cash savings for other loan programs that require a down payment.
Why should you buy a home with a USDA loan?
Why? monthly mortgage insurance! The monthly mortgage insurance (PMI as most know) with a USDA loan is much cheaper per month when compared to FHA or conventional loans. The USDA loan even allows the home seller to pay all the buyer’s closing costs resulting in little to zero out-of-pocket money from the home buyer.