USDA home loan in California was used to purchase this home

USDA Home Loan In California

Key Topics In This Article: Qualifications | How To Apply | Benefits

The United States Department of Agriculture (USDA) home loan program was created in 1949 to assist low to moderate-income homebuyers in rural America in purchasing homes. The program, also known as the USDA Rural Development Guaranteed Housing Loan Program, aims to stimulate economic development and improve the quality of life in rural communities.

The USDA home loan program in California is a government-backed mortgage offered by private home loan lenders and guaranteed by the USDA. It allows borrowers to purchase a home with no down payment and offers low interest rates.

Lenders that offer the USDA home loan program in California generally require a completed application and supporting documentation before an underwriter will review the file and issue an approval (more on this later in the article). Low to moderate-income individuals and families who meet certain eligibility requirements, including income limits and location restrictions, are eligible.

USDA Home Loan Qualifications

Every home loan program in California has a set of qualifications a loan applicant must meet before an underwriter will issue an approval. Reviewing these necessary qualifications prior to applying will help the loan applicant have a more efficient and successful process.

Here are some of the basic qualifications for a USDA home loan in California;

  • Income eligibility requirements (W2 and Self-Employed) are based on household size and property location. The income limits vary by county and are adjusted for inflation each year.
  • A homebuyer must have a credit score of at least 640.
  • You must have a stable and dependable source of income.
  • The USDA home loan in California requires you to demonstrate the ability to repay the loan.
  • Your debt-to-income ratio must be below the USDA home loan limits
  • Be a U.S. citizen or have a valid Permanent Resident Alien card.
  • Purchase a property in a designated rural area. The property must also meet certain requirements, such as being in good condition and meet certain size and type restrictions.

The key to the USDA home loan in California is finding a property in a designated rural area. Most other qualifications are similar to those found in other loan programs (such as the conforming loan program).

Five Steps To The USDA Home Loan Application Process

Applying for a USDA home loan in California is similar to other loan programs. Working with a top-rated mortgage company and a loan officer with more than five years of experience will help ensure a smooth and efficient loan process.

  1. Locate and contact a lender who offers the USDA home loan in California. The home loan lender will review your financial situation and help determine if you are eligible for a USDA home loan.
  2. The next step is to complete a loan application with your loan officer. The loan officer will provide a loan application that must be completed and returned with all required documents, including income documentation, employment information, and credit history (the lender will obtain a credit report).
  3. The property you are buying or refinancing must be appraised. The home loan lender will arrange for an appraiser to evaluate the property to determine its current market value.
  4. USDA home loans require mortgage insurance (like an FHA home loan), which protects the lender if the borrower defaults on the loan. All USDA home loans in California have mortgage insurance.
  5. Once the underwriter has approved your loan application and you have met all the underwriting requirements, you can close your loan!

The five steps to the USDA home loan application are fairly simple and straightforward. Here is a mortgage pro tip for loan applicants refinancing their mortgage into a new USDA home loan in California: before the appraiser arrives at your home to complete the appraisal inspection, make sure the home is ready to show.

“Ready to show” means you are treating the appraisal inspection as if you were selling the home. Clean all the rooms and attend to any necessary landscape concerns. A home that looks like it’s ready to sell, is in a better position to obtain the most value in an appraisal report.

The Benefits Of A USDA Home Loan In California

Ask any California homeowner who has a USDA home loan about the program, and they will tell you it’s been a huge help with getting financing. The problem for most rural homeowners is that lenders avoid providing mortgages to rural homeowners. The USDA home loan program in California helps solve that problem.

Here are the five benefits of a USDA home loan in California.

  • No down payment is required. This is one of the biggest advantages of the USDA home loan program is that it allows borrowers to purchase a home with no down payment.
  • Low home loan interest rates. USDA home loans have low-interest rates, saving you thousands of dollars over the loan’s entire life.
  • Flexible credit requirements. The USDA home loan program has more flexible credit requirements than other mortgage programs, making it easier for borrowers with less-than-perfect credit to qualify.
  • There is no maximum home loan limit for USDA home loans, which means borrowers can finance the entire purchase price of the home.
  • Like FHA and VA home loans, the USDA home loan program does not have a prepayment penalty, which means you can pay off the loan early without incurring a pre-payment penalty fee.

If you are looking to secure a USDA home loan it’s important you decide to work with a Loan Officer with 5-10 years of experience and a top-rated mortgage company.

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A Great Program For Rural Communities

The USDA home loan in California is a great option for people looking to buy a home in a rural community. The home loan lenders that offer the program to rural homebuyers and homeowners can typically secure a great interest rate with no downpayment and no pre-payment penalty.

Your best path to success with the USDA home loan in California is to work with a highly-rated mortgage company and a loan officer with at least five years of experience.

Loan Officer Kevin O'Connor

About The Author

Loan Officer Kevin O'Connor has over 17 years of experience as a Mortgage Loan Originator and is a trusted resource for mortgage education and information. He's the content creator of K.O. Home Loan Solutions and is licensed by the state of California and the Nationwide Mortgage Licensing System. He has a top rating with the Better Business Bureau, Google, Yelp, and Zillow. You can contact him at 1-800-550-5538. CA DRE #01499872 / NMLS #247447