USDA Home Loans in Houston, TX

A Great Option For Rural Texas

Texas USDA Home Loan

Also Known As Section 502 Loans

If you're looking to purchase a home in a rural area of Texas, a USDA home loan, also known as a Rural Development Loan, may be the right option for you. These government-insured home loans allow borrowers to purchase new homes with no money down, offering up to 100% financing for qualified buyers.

To qualify for a USDA loan in Texas, your home must be located in a designated USDA rural area. Our team of experienced Texas mortgage brokers at Flagstone Mortgage can help check the USDA eligibility of your county, or you can check USDA eligibility online.

The primary purpose of the USDA home loan program is to help smaller, rural areas thrive by making homeownership more affordable. We specialize in USDA home loans and can help educate you on the advantages of these loans and determine if you and your property qualify. You might be surprised at how many counties in Texas qualify for USDA loans.

In 2023, USDA loan limits in Texas are set at $336,500, with the highest counties set at $386,400 and vary by county. We can help you navigate these limits and ensure that you have the financing you need to purchase the home of your dreams.

Overall, a Texas USDA home loan can be an excellent option for those looking to purchase a home in a rural area. With no down payment required and up to 100% financing available for qualified buyers, it's a great way to make homeownership more affordable. Contact our team at Flagstone Mortgage today to learn more about how we can help you secure a USDA home loan in Texas.

What Are The Benefits of a Texas USDA Home Loan?

If you're considering a USDA home loan for your rural property purchase, there are many benefits to keep in mind. Here are just a few of the advantages of a USDA loan:

  1. Rural properties: USDA loans are specifically designed for properties in rural areas, making them an ideal option for those looking to purchase a home outside of a major city.

  2. 100% financing: One of the biggest advantages of a USDA loan is that it allows for 100% financing, meaning that you can purchase a home with no down payment required.

  3. No maximum on loan amounts: Unlike some other types of home loans, there is no maximum limit on USDA loan amounts, making it possible to purchase even higher-end properties in rural areas.

  4. No restrictions on seller concessions: With a USDA loan, there are no restrictions on the amount of seller concessions allowed, making it easier to negotiate with the seller and potentially save money on closing costs.

  5. Low monthly mortgage insurance: USDA loans have lower monthly mortgage insurance premiums than some other types of loans, making them a more affordable option for many borrowers.

  6. Acreage up to 30% of total value with restrictions: USDA loans allow for acreage up to 30% of the total property value, although there may be restrictions in some cases.

  7. FHA/USDA certified appraisers only: To ensure that the appraisal process is thorough and accurate, USDA loans require the use of certified appraisers who are approved by both the USDA and the FHA.

  8. 1% guarantee fee may be rolled into the loan: Finally, USDA loans require a 1% guarantee fee, but this fee can be rolled into the loan amount, making it easier to manage your finances.

What Are the USDA Loan Requirements in Texas?

To qualify for a USDA loan in Texas, you must be a United States citizen or permanent resident. Additionally, your monthly payment must not exceed 50% of your monthly income. You must be able to verify steady income over the past 24 months, and you cannot have had any debt sent to collections within the past year.

If you want to be approved quickly and receive the most attention from lenders, it's best to apply after you raise your credit score to at least 640. While USDA loans are designed to help people with the greatest need, those without safe and sanitary housing are prime candidates for this type of mortgage loan.

It's important to note that USDA loans are only available for properties in designated rural areas. While you won't be able to purchase a home in the city with this loan, some suburbs are considered rural by the USDA. You may be able to get a Houston USDA mortgage loan to purchase a home just outside of the city.

At Flagstone Mortgage, we specialize in USDA home loans and can help you navigate the requirements and find the right loan for your needs. Contact us today to learn more about how we can help you secure a USDA loan in Texas.

Do I Qualify For A USDA Loan?

Eligibility Criteria For USDA Loans

Location of the Property

Your desired home should be situated in an area deemed rural by USDA standards. Interestingly, many smaller towns and the peripheries of large cities meet this requirement. To verify if a specific location qualifies, consult the USDA's official online portal.

Income Guidelines

USDA outlines specific income thresholds, adjusted according to the county and number of household members. To be eligible:

  • You must fall within these set income limits.
  • The combined income of every adult in the household is taken into account, not just those applying for the loan.
  • For reference, the income restrictions differ for households with 1-4 members compared to those with 5-8.

Credit Score Considerations

While there isn't an official minimum credit score set by the USDA, most lenders expect at least a 640 score. Potential borrowers with a lower score might still be considered but should anticipate a more rigorous underwriting process.

Proof of Stable Income

Applicants should be able to present proof of a reliable income source, ideally consistent over the preceding 24 months.

Debt-to-Income (DTI) Proportions

USDA provides specific DTI guidelines to ensure borrowers can manage monthly loan repayments:

  • The total monthly mortgage expense, inclusive of taxes and insurance, shouldn't surpass 29% of your gross monthly earnings.
  • Cumulative monthly debts, like auto loans or credit card bills, shouldn't go beyond 41% of your gross monthly income.

Residency Requirements

Applicants should either be U.S. citizens, U.S. non-citizen nationals, or hold the status of a qualified alien.

Home Occupancy

The home procured using the USDA loan should serve as your main residence.

Federal Debt Standing

Potential borrowers with overdue federal debts, including student loans or unpaid taxes, are typically deemed ineligible.

Loan Amount Determinants

Although the USDA hasn't set an upper limit for the loan amount, your permissible borrowing amount hinges on your income and the DTI criteria.

Property Condition

Homes should adhere to USDA's health and safety standards. Specifically, they shouldn't display major structural issues or pose notable health or safety risks.

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