The USDA loan program is a popular choice for buyers looking to purchase homes in designated rural areas. However, the USDA closing process can be quite different from traditional mortgage closings. In this article, we will explore the timeline of the USDA closing process and discover tips to speed up your journey to homeownership.
Getting a mortgage can be complicated, but USDA loans add another layer of complexity. As a first-time homebuyer navigating the USDA loan process, I was confused trying to understand the timeline. How long would it take from start to finish? What steps are involved? This article breaks down the usda loan process timeline to help you set proper expectations.
Overview of the USDA Loan
The United States Department of Agriculture’s rural development program offers 100% financing to eligible homebuyers in rural areas. The perks of USDA loans include
- Zero down payment – No need to save for a down payment if you qualify
- Low interest rates – Often lower than conventional loans
- Low mortgage insurance – An upfront 1% guarantee fee and monthly 0.35% annual fee
USDA loans promote homeownership in rural areas. If you’re eligible based on location, income limits, and credit score requirements, it can be an excellent loan option.
USDA Loan Process Timeline
The usda loan process timeline can vary quite a bit depending on your individual situation. Best case scenario, expect 30-60 days from start to finish. However, it could take 90 days or longer depending on factors like:
- Your credit and income documentation
- Appraisal turnaround time
- Lender workload and responsiveness
- Backlogs at your local USDA office
Here are the general steps in the USDA loan process and typical timeframes:
Prequalification (1-3 Days)
- Contact USDA lenders and provide basic financial information
- Lender reviews eligibility requirements
- Prequalification decision
This first step is a quick eligibility check before you move forward,
Preapproval (1-2 Weeks)
- Submit loan application and documentation to lender
- Lender verifies income, assets, credit, eligibility
- You receive a preapproval letter
Preapproval involves a more in-depth look at your finances and official preapproval letter.
House Hunting (Variable)
- Search for USDA-eligible homes in rural areas
- Make an offer and negotiate terms
This step takes however long it takes you to find the right home.
Underwriting (2-4 Weeks)
- Lender orders appraisal & reviews your application
- File sent to USDA office for approval
- USDA gives final sign-off
Underwriting involves appraisal, credit checks, and the extra USDA approval step.
Closing (1-2 Weeks)
- Final underwriting and clear-to-close
- Schedule closing date
- Sign paperwork and get keys!
Closing is the finish line – signing final documents and the home is yours.
As you can see, a 30-60 day usda loan process timeline is common if things go smoothly. But delays in underwriting or at the USDA office could extend an already lengthy process. Proper planning and coordination with your lender is key.
How to Shorten the USDA Timeline
While some USDA timeline delays are unavoidable, you can help speed up the process by:
- Having all your financial docs ready upfront
- Only applying when you’re ready to buy ASAP
- Being responsive to lender requests
- Finding an experienced USDA lender
- Starting with a strong credit score
- Choosing a home with no red flags in the appraisal
If you’re organized from the start, respond quickly to requests, and avoid hiccups like appraisal issues, you can get from prequalification to keys in around 30-45 days in a best case scenario.
Is the Long Timeline Worth It?
For eligible borrowers, USDA loans can be worth the wait. Perks like zero down payment and low rates are huge savings.
But before you apply, make sure you:
- Verify income and geographic eligibility
- Understand lender timelines and workload
- Are ready to move forward quickly once preapproved
If you’re flexible on timing and choose the right USDA lender, the amazing benefits outweigh the potential for delays. With proper planning, you can get the home of your dreams with no money down through USDA!
Next Steps in Your USDA Loan Journey
For more guidance, I highly recommend using our website’s USDA loan calculator and eligibility tools. And connect with one of our recommended USDA lenders when you’re ready to prequalify.
Wishing you the best of luck on your path to affordable USDA financing and rural homeownership! Please reach out if you have any other questions.
How long does a USDA loan take to close?
It generally takes between 30 to 45 days to close on a USDA loan. This USDA closing process begins with the initial contract and extends to the final closing day.
Closing Timeline for USDA Loans
Your closing timeline may vary depending on a variety of factors, but understanding the key stages can help you navigate it more efficiently.
The USDA closing process can be divided into six phases:
| Phase of USDA Closing Process | Approximate Time Frame |
|---|---|
| 1. Purchase Agreement | Varies |
| 2. Appraisal | 1 week |
| 3. Underwriting | 2-7 days |
| 4. RDO Approval | A few days to a week |
| 5. Final Approval | 3+ days |
| 6. Closing | 1 week |
While each of the above phases has its own approximate time frame, keep in mind that some of these phases may overlap. For example, some USDA lenders may complete certain aspects of the underwriting phase while waiting on the home appraisal result.
What is the secret to a successful USDA loan process?
How long does it take to get a USDA loan?
Make sure your lender is using an appraiser familiar with the USDA guidelines, and expect this step to take at least a week to complete. This step might take a little longer than a conventional mortgage because there are two levels of approval for USDA loans.
How long does a USDA loan take to close?
It generally takes between 30 to 45 days to close on a USDA loan. This USDA closing process begins with the initial contract and extends to the final closing day. Your closing timeline may vary depending on a variety of factors, but understanding the key stages can help you navigate it more efficiently.
How do USDA home loans work?
Once you’ve signed a purchase agreement with the seller, you are under contract, and your loan originator will begin underwriting your new mortgage. Be aware that the underwriting process for USDA home loans can take longer than the process for traditional mortgages. This is because of a final step in the USDA loan approval process.
How long does the USDA home loan process last?
All in all, in the best-case circumstances, you can expect the USDA home loan process to last anywhere from 30 to 60 days—or longer if there are hiccups such as missing paperwork. The availability of government funding for these loans might also lengthen the process, in some cases up to three months.