Everything You Need to Know About USDA Loan Requirements in Oregon

Getting a mortgage to buy a home in Oregon can be challenging, especially for low-to-moderate income buyers That’s where USDA home loans come in. These government-backed mortgages offer affordable financing and flexible credit requirements to help rural residents achieve homeownership

In this comprehensive guide, we’ll explain all the key details about USDA loan requirements in Oregon so you can determine if this is the right mortgage option for you

Overview of USDA Loans

USDA home loans are issued by the United States Department of Agriculture Rural Development division. They offer two main mortgage programs:

• USDA Guaranteed Loans – Also called Section 502 loans, these are available to moderate income borrowers. Guaranteed loans require no down payment and offer competitive interest rates.

• USDA Direct Loans – For very low to low income buyers. Direct loans offer subsidized interest rates as low as 1% and can cover 100% of purchase costs.

Both loan types require borrowers to meet income and credit requirements. The property must also be located in an eligible rural area to qualify.

USDA Loan Requirements in Oregon

To get approved for USDA financing in OR, you must meet certain criteria:

Borrower Eligibility

• Citizenship – At least one borrower must be a U.S. citizen, U.S. non-citizen national, or qualified alien.

• Income Limits – Household income must be below income caps set by USDA. These vary by county and household size. In OR, the average limit is $62,818 for a family of 4.

• Credit History – Minimum 620 FICO score required. Lower scores may be acceptable with strong compensating factors.

• Debt-to-Income Ratio – Your total DTI cannot exceed 41% with a USDA loan.

• First-Time Homebuyer – You don’t have to be a first-time buyer to qualify, but there are special perks like lower MI with USDA loans if you are.

Property Eligibility

The home or land you wish to buy must meet USDA location and quality standards:

• Rural Location – The property must be in a rural area as designated by USDA maps. Most small towns and remote areas qualify.

• Home Condition – Existing homes must be decent, safe, and sanitary. New construction must meet all local building codes.

• Primary Residence – You must intend to use the home as your primary residence and move in within 60 days of closing.

• Acreage Limits – Properties must be 2-10 acres in size. Anything larger requires special approval.

Loan Terms

USDA mortgages offer great flexibility:

• 100% Financing – You can qualify for a no down payment loan. All closing costs can be rolled into the loan.

• Low Rates – Current USDA rates average around 5% APR which is very competitive.

• 30 Year Terms – Extended repayment terms keep monthly payments low.

• Assumable – USDA loans can potentially be assumed by a new buyer when you sell.

USDA Loan Limits in Oregon

USDA does not impose maximum loan amounts. Your borrowing power is determined by your income, debts, and the appraised value of the property.

However, the USDA does set maximum income limits based on family size and county location. In Oregon, here are sample limits for a 4-person household:

• Portland Metro: $449,000
• Salem: $391,000
• Eugene: $391,000
• Bend: $408,000

So your loan amount is capped by these income ceilings. A good rule of thumb is you can typically borrow 3-4x your gross annual income with a USDA loan.

How to Apply for a USDA Loan in Oregon

Follow these steps to get a USDA-backed mortgage in OR:

1. Check Your Eligibility

Use the USDA Property Eligibility and Income Eligibility tools to see if you qualify before applying.

2. Find a Lender

Work with a lender approved to issue USDA mortgages. This is key to a smooth process.

3. Submit Your Application

Complete the USDA loan application including all required documents. Your lender will assist you.

4. Get Home Approval

The lender will arrange the home appraisal. Make sure the property meets program conditions.

5. Close on Your Loan

Final loan approval takes 1-2 months in most cases. Now just close, move in, and start enjoying homeownership!

USDA Loan Refinancing in Oregon

You may also be able to refinance an existing USDA loan to lower your interest rate or payments. The Streamlined-Assist refi option lets you roll your upfront finance fees into the new loan balance to make refinancing more affordable.

Alternatives to USDA Loans in Oregon

Some other down payment assistance programs to consider besides USDA include:

• FHA loans – Offer 3.5% down financing and relaxed credit standards.
• VA loans – No down payment required if you are a veteran or service member.
• Down payment grants – First-time buyer grants through OHCS can help cover your downpayment.
• Bond loans – Affordable conventional financing option for first-time buyers.

That covers everything you need to know about getting a USDA home loan in Oregon! These mortgages give rural residents access to affordable credit and make the dream of low-cost homeownership attainable.