The USDA Guaranteed Rural Housing Loan, also known as Rural Home Loans Utah, is backed by the United States Department of Agriculture. This loan was created to spur rural economic growth and is only available to those with qualifying income who live in USDA-designated rural areas.
USDA Loans Utah: How Do They Work?
- USDA loans are guaranteed by the United States Department of Agriculture, making them more accessible than other loan types.
- USDA loans are available as 30-year fixed-rate mortgages or FHA mortgage 3.5 down payment.
- If you currently have an Utah housing loan, you may refinance it into a new USDA loan; however, you may not refinance into a USDA loan if you currently have another loan type.
USDA is an acronym for the Department of Agriculture of the United States of America. The Rural Housing Service (RHS) is a USDA division that administers the USDA’s Guaranteed Rural Housing Loan Program, commonly referred to as the USDA Loan. USDA loans are intended to assist low- and moderate-income families in obtaining affordable mortgages in rural areas that qualify. Currently, the only loan option available is a 30-year fixed-rate loan.
USDA Rural loans have several restrictions, but this should not deter you from purchasing an eligible property.
- Financing at 100% with no down payment required.
- In general, closing costs can be covered by a slightly higher interest rate.
- Reduced interest rates on government loans
- No mortgage insurance is required; instead, a meagre annual fee is charged. However, one can consult Utah mortgage lenders for VA home mortgages.
- Due to the rural location requirement, you get more houses for your money via St George home loan.
Utah Home Loan Requirements for Property:
- Must be a single-family residence, a condominium approved by Fannie Mae, Freddie Mac, HUD, or VA, or a PUD – a townhome.
- The property must not be a farm or generate revenue.
- The maximum acreage permitted is 40 acres.
- The site’s value should not exceed 30% of the property’s total value (exceptions may apply if excessive land value is customary as evidenced by the appraisal)
- At the time of closing, the property must be in “marketable” condition, which means it can be sold in its current condition if necessary.
Because this is a low- to moderate-income family loan program, you cannot own any other homes at the FHA home loans Utah. If you own additional property, it must be sold before or concurrently with the closing of your USDA loan.
An exception may be made if you are relocating and your alternate residence is one of the following:
- They are not in the same commuter belt (at least 50 miles distance)
- Functionally insufficient (the USDA considers a mobile home that is not permanently attached to a foundation to be functionally insufficient).
The Advantages of Rural Housing Loans:
- There is no requirement for a down payment.
- Acceptance of credit is limited to non-existent.
- Closing costs may be included in the loan amount (subject to availability).
- There is no cap on the purchase price.
- Open to First-Time Home Buyers and Seasoned Home Buyers
- Among the eligible property types are the following:
- Existing housing stock
- New building construction
- Modular dwellings
- PUDs (Planned Unit Developments)
- Rural Americans can obtain affordable mortgages.
Rural homebuyers can obtain affordable financing for their next home through USDA home mortgage and rural housing loan program. This home loan program was created to assist rural residents with low to moderate incomes in purchasing a new home by offering affordable interest rates and loan terms. Applicants must purchase a home in one of the eligible rural areas and maintain a household income within the established limits for the home’s area.
Additional information about USDA loans:
- Existing homes, new construction, modular homes, planned unit developments (PUDs), eligible condominiums, and new manufactured homes are all eligible property types.
- Credit in non-traditional forms may be accepted (this includes a detailed payment history on rental payments, utility bills, telephone/mobile service, and television service).
USDA Credit Requirements for Home Loans in Utah:
- Approval requires a minimum credit score of 580, though many lenders now require 620.
- At least one applicant whose income or assets are used to qualify must have at least two historical credit accounts with a minimum 12-month history (auto loan, credit card, personal loan, etc.). These accounts may be active or inactive.
- Individuals who have previously filed for bankruptcy will need to re-establish credit before applying for a mortgage loan. This requires current accounts in good standing.
- Your credit history must demonstrate a reasonable ability and willingness to repay debts as they mature.
- If your credit score is between 580 and 639, your rental or mortgage history for the previous 12 months will be analyzed, and any late payments must be justified. There is additional scrutiny, and a final USDA underwriting approval is required for credit scores less than 640, which can add 1-2 weeks to the loan closing time frame – depending on the USDA office’s workload.
Utah’s Income Limits:
Your household income cannot exceed 115 percent of the rural development area’s median income level.
Keep in mind that adult household members (over 18) who are not listed on the loan application must also provide proof of employment.
Among the adjustments made to reduce annual income are the following:
- $480 for each minor child, full-time student, or family member with a disability
- $480 for each individual who is disabled or disabled but is not the applicant or co-applicant.
- A deduction of $400 is allowed for each family member over the age of 62.
- $480 for each student enrolled full-time
- Medical expenses for any elderly family member that exceed 3% of gross annual income;
- The actual cost of child care – if the children are under 12 years.
One can also consider Utah FHA refinance to assist themselves in rural home loans.