Maryland first-time buyers can still obtain a home loan with $0 money down thanks to the USDA Rural Housing mortgage. The Maryland USDA home loan program, also known as the Maryland Rural Development Loan program, is a 100% government-insured mortgage that allows home buyers to purchase a home in a rural defined location with no money down.
The USDA loan allows for 100% financing, and reasonable credit guidelines, and even allow for all closing costs to be paid by the seller or financed into the overall amount of the loan under certain conditions. Maryland USDA home loans offer some of the lowest mortgage rates out of any other home loan program in the country, come with flexible 30-year fixed rate terms, and are specifically designed for moderate-income buyers.
Maryland USDA Property Loan Eligibility Requirements:
To be eligible for a Maryland USDA home mortgage, the property you’re looking to purchase must be located in a USDA-eligible rural area. USDA-eligible rural areas include any open rural area, places with a population under 10,000 residents, as well as some areas with populations between 10,000 – 25,000 as long as they are located outside of major Metropolitan areas. There are still many USDA-eligible properties that are located in small suburban communities not too far outside of major Maryland cities such as Baltimore.
USDA eligible housing must be modest in size, design and cost and must meet all standard HUD requirements like other loan programs such as FHA and VA. Home buyers that have questions about the eligible locations can contact us now by submitting the Quick Contact form on the left side.
Types of USDA Loans Available
There are currently two kinds of USDA rural home loans available to qualified Maryland single-family residents. These are USDA Guaranteed Rural Home loans and USDA Direct Rural Home loans.
USDA Direct Rural Home Loans
USDA Direct rural home loans are less common than USDA Guaranteed home loans and are only available for low to very low-income households. For a household to be eligible for a USDA Direct home loan they must have an overall household income that is either below or in between 50-80% of the area median income. USDA Direct home loans are financed directly by the USDA and usually come with a 30 year fixed rate terms.
USDA 502 Guaranteed Rural Home Loans
USDA Guaranteed rural home loans are the most common type of USDA loans and allows for higher income limits and 100% financing for home purchases. To be eligible for a USDA Guaranteed home loan applicants may have an income of up to 115% of the median household income for that particular area. All area income limits can be viewed here on the website. All USDA Guaranteed home loans come with flexible 30-year fixed rate term, this program is only offered through approved USDA lenders.
USDA offers many great benefits for home buyers just starting out, listed below are some of the program highlights:
- Secure fixed interest rate– One of the great advantages of the USDA loan is the fixed 30 year interest rate. Compared to other traditional loans where the interest rates can vary, the interest rate remains the same for the entire course of the loan. No pre payment penalty or adjustable rate (ARM) terms. This is good because the home owners can plan out their fixed monthly expenses.
- No Money Down – The Federal government insures or backs USDA loans, and allows 100% financing as a way to help develop and expand rural locations in Maryland. The USDA mortgage also allows for the seller of the home to pay the buyers closing costs, up to 6%. With that home buyers can generally close on a home with little to NO money out of pocket.
- Loan qualifying is simple – Getting qualified and approved for a USDA loan in Maryland is quick and easy. Often times the entire pre approval process can be done in minutes. There are no special requirements like first-time buyers class or education that is needed to apply. Buyers just need to insure they have reasonable credit (over 620) and income below the max limit set for Maryland. Contact us to discuss income limits in more detail.
- Buyers aren’t required to have a lot of savings – Applicants don’t need any savings to be approved. Most conventional loans require large down payments and savings reserves for buyers to get approved, but not the USDA program. Buyers can also receive gift funds if they choose to put money down.
- The USDA program can be used by any home buyer – Not exclusively for first time home buyers, the USDA loan can be used by move up buyers as well. No special class or down payment assistance needed.
- No Loan Limits – USDA does not have purchase loan limits like other programs.
Maryland USDA home loan applicants need to know what to expect before starting the approval process. Knowing what to expect will always help your chances in successfully getting your USDA loan approved. Below we have listed some things to consider :
USDA Debt-to-income ratio:
A solid review of the buyers debt must be done by lenders to insure the buyer can meet the obligation. Banks and lenders don’t want to see a total debt load that’s higher than 42 percent for a USDA mortgage approval. Buyers will also need two years of consistent employment with large gaps in employment.
USDA Credit check:
It’s usually the pesky small things that can hurt your credit. If you think your credit needs some work, check it out in advance before you make an application. Keep in mind, your interest rate is tied to your credit score. Buyers with the highest credit scores (720 +) generally receive the lowest interest rate which can save thousands over the long term.
USDA Credit score:
As of 2016, a credit score of 620 or better is needed for the 100% Rural Development loan. If you came out of bankruptcy or foreclosure, or other financial hardship you would need to have maintained perfect credit for (3-4 years) regardless of your current credit score. Remember, a 620 credit score do not guarantee loan acceptance.
USDA Loan Application and Closing Process:
- A full application will have to be filled out that detail everything about you which will be used in figuring out whether you’re eligible for the USDA loan. The rate and the terms of the loan will also be determined largely by the information in your application and credit score. The complete USDA application process takes about 20 minutes to complete. In the event the application is pre-approved, and you get an approved purchase contract, you will get the disclosure documents which are essentially mortgage disclosures that have all the fine details regarding the terms, interest rates, cost and payments of the loan.
- The mortgage disclosures are to be signed and returned along with other documents such as your bank statements, driver’s license, income pay stubs, etc., for verification purposes. Usually, these documents are prepped and readied well before the loan application is submitted to the lender.
- The mortgage company processor will review and verify all documents and requests for missing or any additional documents from the borrower if need be. Upon completion, the documents are then submitted to the underwriter for approval.
- The underwriter will send a loan conditions list detailing any additional information or documents needed from the buyer.
- Once the buyer completes the needed items on the list, the file is sent back to the lender, bank or loan broker for final approval. After this the closing date is set up with the title agent, buyer and seller. The USDA closing turn time in Maryland is approximately 35 days from start to finish.
USDA Mortgage Hub is the nations leading resource on 100% Rural Housing loans. Call us today at ph: 800-743-7556 to learn more.
Serving Maryland – including Baltimore, Columbia, Germantown, Silver Spring, Waldorf, Ellicott City, Glen Burnie, Frederick, Dundalk, Rockville, Gaithersburg, Bethesda, Towson, Bowie, Aspen Hill, Wheaton, Bel Air South, Potomac, Severn, North Bethesda, Catonsville, Hagerstown, Woodlawn, Essex, Annapolis, Severna Park, Odenton, Clinton, Chillum, Olney, Randallstown, Montgomery Village, Owings Mills, Owings Mills, Pikesville, Eldersburg, Bel Air North, College Park, Salisbury, Parkville, Milford Mill, Crofton, Perry Hall, Carney, Reisterstown
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