We often receive questions regarding how long does it take to close USDA loan? In this post, we will shed some light on the USDA mortgage closing process and the timelines involved.
First, it’s important to understand the USDA Rural Housing closing loan process is actually a two-step process that involves the lender and the actual USDA office.
Most mortgage programs like Conventional and FHA loans are simply processed and underwritten in one step, by the lender in house. Once the loan clears all the underwriting conditions (borrower documents, appraisal, home inspection, etc) the loan is cleared for closing. The process is pretty streamlined and closings often occur in three or four weeks.
As mentioned the USDA loan works a little different and generally take about a week longer to close. Basically, once the loan is initially underwritten and approved by the lender, the file is sent to the regional USDA office for a final commitment. Think of this process as a “second look” or final review of the loan file. This commitment time normally takes 2-5 business depending on the state. When USDA is finished with their review, the lender is notified and the loan is scheduled for closing.
USDA Loan Timelines:
Below we will break down the timeline for each step of the process from application to closing.
- Loan Application – This is the initial USDA loan application, the process takes about 30 min to complete. Once this process is complete the home buyer receives their letter of loan pre-approval and can begin the home search process.
- Home Search: Once the borrower finds their perfect home and has a contract to purchase, the loan process begins.
- Loan Process: The mortgage company will work with the loan applicant(s) to collect any outstanding documents and also review the mortgage disclosures. The borrower’s loan file will be submitted for underwriting, while this is happening the lender will order the appraisal. The appraisal normally takes a week to complete. While all these things are happening the home buyer will generally order their inspections at this time – home inspection, WDO, etc.
- All the inspections, appraisal and loan underwriting generally take 2-3 weeks depending on the lender and other third parties involved. Home buyers should keep in mind there are many third parties and “moving parts” involved in a real estate closing: lender, USDA, realtors, home insurance agent, appraiser, surveyor, home inspector, etc. Assuming the appraisal and inspections are satisfactory, the loan file is cleared and sent to USDA for final commitment.
- USDA Review: USDA generally review all loan packages within 2-5 business days. This timeline can vary slightly based on loan volume and the property state. Once the file review is complete, the lender will be notified and the mortgage file will be cleared for closing.
- Closing Time: The file will typically be ready to close within 24-48 hours of receipt from the USDA office. The buyer and seller will review all the closing costs and final figures in advance. Once any mistakes or typos are corrected, the package is ready to for final signatures and funding.
Please note, home buyers that have staus questions regarding a USDA loan already in process should call their lender or bank direct for updates.
New home buyers that want to learn more about the USDA loan, or how to apply can contact us to learn more. Simply call the number above, or submit the Quick Contact Form on this page.
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