Arizona USDA Lender Guidelines

First time buyers in Arizona can still purchase a home in 2016 with the 100% USDA Rural housing mortgage. Many locations in Arizona still eligible for this special government backed loan program.  USDA ( also known as 502 Guaranteed loan, RD, Rural Development or Rural Housing) also has a lot of other advantages for buyers. Below we will discuss the Arizona USDA loan requirements and everything buyers need to know. If you have questions about the Arizona USDA lender guidelines, please reach out to us by calling ph: 800-743-7556 or just submit the quick contact form on this page.  Mobile users will find the Quick Contact form above.  We service all 50 states nationally,  7 days a week.

Before we begin, let’s discuss some of the advantages of the 100% USDA home loan:

USDA financing advantages:

• USDA is the only mortgage program today that allows Arizona (non-military)  home buyers to purchase with no down payment.
• 100% financing , plus USDA allows for buyers to get their closing costs paid by the home seller, or added into their loan under certain cases.
• USDA loan applicants are NOT required to be first time home buyers. You can be a move up or second time buyer.
• No USDA purchase loan amount limits – home buyers qualify based on their income and debt to income ratios.
• Decreased monthly mortgage insurance. USDA requires a monthly mortgage insurance costs each month like most home loans when the buyer is putting down less than 20 percent down payment.  The benefit with USDA is the monthly PMI costs is much less when compared to other home loans like FHA, etc.
• Starting the process for a USDA loan doesn’t require any special class, or down payment assistance – it’s already 100% financing.  Borrowers can do their application, get pre-approved and start searching for a home all in the same day.
• The USDA home inspection and appraisal requirements are the same as the other loan programs today – no special guide lines.
• Home buyers are NOT required to have a minimum amount of savings.
• Safe 30 year fix terms at low interest rates with no early pay off penalty worries.

So great – so what’s the catch you might ask?   

• The property to be purchased must be located in a USDA Rural defined approved area. In addition the USDA program has income caps – please read below for more info on 2016 USDA eligibility here.
• Student loan debt – Student loan debt is not deferred when qualifying for a USDA loans. Because of this, USDA loan applicants with significant student loan debt may have encounter obstacles in regards to debt to income ratio limits.
• Closing time frame – The USDA loan program is unique because the loan files are processed in two steps. First by the mortgage company, bank or broker originating the loan, then the file goes through a final review at the local USDA Arizona office. This means that USDA loans will take an additional two weeks (give or take) to close when compared to other loans.  Please note: USDA 502 Guaranteed loans can only be proceed by approved mortgage companies, not directly by the USDA.  USDA only processes their “Direct” loan in house. This program is set aside strictly for very low income, subsidized housing.

Arizona USDA Home Loan Eligibility

The USDA mortgage has a few important eligibility requirements that must be met in order to use the program.  Let’s take a closer look below.

• The location of the house – The house you decide to purchase must be located in a select rural approved area according to the USDA property map here. You can input the property address and check to see if the house resides in an eligible location. The home can be any single family, town home and select FHA approved condo.  Mobile homes and manufactured homes are not allowed.  If you need assistance finding USDA approved homes in your area, please contact us below.
• The income for the household – The USDA Rural Development mortgage has income limits or “caps” in place. More importantly, the income caps apply to all income producers living in the house, even if they are NOT listed on the loan application. USDA limits vary based on the number of members living in the household, number of dependants, elderly and county. Contact us below to discuss in detail.

Arizona USDA Loan Application Requirements

USDA loans really aren’t that much different than other home loans like FHA, VA, etc.  USDA has standard qualifying guidelines that must be met. Let’s discuss the latest 2016 USDA guidelines below:

• Credit Fico Score – USDA lenders will want to see applicants have a 620 or greater credit score to be approved. However, a 620 credit score do not guarantee loan approved. All mortgage companies have additional requirements in place for applicants that have experienced a past financial hardship like foreclosure, short sale or bankruptcy. These are called “overlays”  Example – if you have a 710 credit score, but had a foreclosure 2 years ago, you would likely need to wait a few more years.
• Employment History-  Two years of stable income will likely be needed. You are not required to have the same job for two years, just a stable history. Example:  Let’s say you have been working as fireman for 3 years. You recently left one fire department  and started working at another. In addition, you took a few weeks off between jobs.  This is fine.  Or maybe you needed to take a 3 weeks for hardship reasons – this likely would be okay as well.  Recent graduates are the exception of this rule as they do not need a solid a two year job history.  Self employed borrowers will need two years of tax returns. Any part time jobs will need two years of stable history to be included.
• Debt to income – Like all other home loan programs, USDA has debt to income ratio limits.  Borrowers can read more about this under the USDA eligibility section.
• A copy of the borrowers bank statements will be needed during the approval process. Although USDA does not require a certain amount of savings, applicants will want to insure they can document any deposit out of the ordinary.  Normal weekly, bi weekly or monthly payroll deposits are normal and to be expected. However, random deposits will be documented with a copy of the check, and deposit slip. Gift funds are allowed with USDA loans, just be sure to keep a proper paper trail when it comes time to document. Additionally, the gift donor may be required to provide their bank statements as well. These requirements are not exclusive to USDA loans, they are essentially required on all government loans today.

USDA Mortgage Hub is Arizona’s leading source for USDA loans.  Buyers that have questions or want to learn about getting qualified can call 800-743-7556 or just fill out the Quick Contact form on the right side. Mobile users will find the Quick Contact icon at the top of their page.

Serving the entire U.S including Arizona-  Phoenix, Tucson, Mesa, Chandler, Glendale, Scottsdale, Gilbert, Tempe, Peoria, Surprise, Yuma, San Tan Valley, Avondale, Casas Adobes, Flagstaff, Goodyear, Lake Havasu City, Catalina Foothills, Buckeye, Casa Grande, Sierra Vista, Maricopa, Oro Valley, Prescott, Bullhead City, Prescott Valley, Sun City, Apache Junction, Marana, El Mirage, Drexel Heights, Fortuna Foothills, Kingman, Kingman, Florence, Queen Creek, San Luis, Sun City West, Sahuarita, Anthem, Fountain Hills, Green Valley, Nogales, Rio Rico, Douglas