The USDA home loan program can be a great option for eligible homebuyers in California looking to purchase a home in a rural area with little or no money down USDA loans offer low interest rates and flexible credit requirements However, there are specific eligibility requirements borrowers must meet to qualify. This article will cover all the key USDA loan requirements in California so you can determine if it’s the right mortgage program for your home purchase.
Overview of USDA Loans
The USDA Rural Development agency offers home loans to help low- and moderate-income buyers purchase homes in rural areas. These loans are backed by the federal government and issued through approved lenders.
Some key features of USDA loans include
- Requires no down payment or minimum credit score
- Offers competitive interest rates
- Allows expanded debt-to-income ratios
- No mortgage insurance required
While USDA loans offer more flexible underwriting than conventional loans, borrowers must meet certain eligibility criteria. Let’s take a closer look at the specific USDA loan requirements for California residents.
USDA Property Eligibility in California
The most basic USDA loan requirement is that the home you wish to purchase must be located in an eligible rural area. The USDA has designated certain locations in California as rural areas eligible for their home loan program.
To qualify as rural, the home’s location must meet the following criteria:
- Population under 35,000
- Not part of an Urbanized Area as defined by the Census Bureau
- May be in an area designated as a rural housing site
You can check a specific address or general area on the USDA’s eligibility site to see if it qualifies as rural. Generally, rural areas can be found throughout Central Valley, far Northern California, and the Sierra Mountains region.
The home itself must also meet USDA requirements regarding the type of property, including:
- Single family home, duplex, condo, townhome, or manufactured/mobile home
- Main residence, not an investment property
- Within USDA lending limits for the county
Borrower Eligibility Requirements
In addition to location requirements, borrowers must meet certain eligibility criteria to qualify for a USDA home loan in California.
Income Limits
Your income must be below the limit set for your county and household size. Income limits range from $60,000 to $123,500 depending on the area. All sources of income are considered for all adult household members.
Credit Requirements
No minimum credit score is required. However, you must demonstrate a willingness and ability to repay debts. Major issues like foreclosure or bankruptcy may disqualify an applicant.
Downpayment and Fees
No downpayment is required. However, applicants with assets above a certain amount may have to use some funds. Closing costs help can be provided.
Homebuyer Education
First-time homebuyers must complete an approved homebuyer education course.
Citizenship Status
Applicants must be U.S. citizens, permanent resident aliens, or qualified aliens.
Meeting all the eligibility criteria is essential for securing a USDA home loan in California.
How to Apply for USDA Loans in California
If you meet the requirements, the next step is applying for a USDA mortgage. Here is the basic application process:
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Get pre-approved – Work with a USDA approved lender to confirm you meet the requirements and determine your budget.
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Find a home – Once pre-approved, you can shop for eligible rural properties within your price range.
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Make an offer – When you find the right home, make an offer contingent on securing your USDA financing.
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Complete loan application – Provide all required documents to your lender such as income verification, credit history, etc.
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Close on your new home – After your loan is approved, just complete the final closing process to get the keys to your new home!
Reaching out to USDA approved lenders is the best way to get started. They can guide you through every step of the mortgage process from pre-approval to closing.
USDA Loan Requirements Summary
While USDA home loans offer great benefits, it’s important to carefully evaluate the requirements before applying. Be sure you meet all the criteria regarding income limits, property location, credit history, citizenship status and other factors. Connecting with an approved USDA lender can help determine if this mortgage program is a good fit for your situation.
With low rates, flexible credit requirements, and no downpayment, a USDA loan can be a great way for eligible buyers to purchase a home with rural California. Just be sure to understand the specific eligibility standards and work with a knowledgeable loan officer to navigate the application process.Meeting the USDA guidelines is the key to successfully financing your home in the Golden State!
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Buying a home in California just got a lot easier. With a USDA loan, that California dream home could finally be yours. For a USDA loan in California, the household income limit for a family of 1-4 is about $111,000, and for a family of 5 or more can be as high as $314,400. Fill out the form to the right to get in touch with one of our USDA loan specialists and get started on your new loan!
This map displays the areas of California that are eligible for USDA loans. For more detailed information, check out the USDA loan eligibility screen.
Below you will find a link to the USDA income limits for California:
- NO down payment – Finance 100% of your home
- NO maximum loan amount in California.
- 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 California 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?
USDA Eligibility Map – California
For starters, a USDA loan is one of the only loan programs offered to the general public that allows you to finance 100% of your home’s value. That means no down payment of any kind!
USDA loans are made even more affordable through very competitive fixed interest rates, ensuring your payments will not increase every month.
How Do I Get and Who Qualifies for the USDA Loan in California?
What is a USDA loan?
Despite the name, the USDA loan is not for farms. It’s for regular, single-family homes you see every day. It was created to spur economic development in areas outside of cities. That’s why it’s also known as the Rural Development or RD Loan, or even the “Section 502 Guaranteed Loan Program.”
What are the requirements for a USDA home loan?
Here are the key requirements: 1.**Income Eligibility**: – Your household income cannot exceed **115% of the median household income** for your area. – Applicants must have a stable income track
Can you get a USDA loan in California?
Becoming a homeowner in many areas of California is no easy task. Prices are typically high, and just a 3-5% down payment can be $20,000 or more. But a USDA loan can help. It requires zero down, offers lower mortgage insurance than FHA, and lower credit scores are okay. Here’s how to become a California homeowner using this powerful program.
Are USDA Loans guaranteed?
USDA loans are guaranteed by the USDA Rural Development Guaranteed Housing Loan Program, a part of the U.S. Department of Agriculture. Most USDA loans are issued by partner lenders, though the department can grant them directly to qualified borrowers with incomes below a certain limit.