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USDA cons

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netsfan549
Regular Contributor

USDA cons

I have been doing my research about loan companies. I keep hearing great stuff about USDA.. Do they have any cons? Thank you

Message 1 of 9
8 REPLIES 8
Anonymous
Not applicable

Re: USDA cons

Hi,

   From what I've read, USDA is restricted to specific rural areas, you cannot have anyone live in the home whose name is not on the mortgage papers, and you cannot rent out the home. If you recieve any down payment assistance, it has to be paid back to usda if the home is resold or refinanced. Also, I believe PMI (private mortgage insurance) is required - although I can be wrong on this last one.

Message 2 of 9
netsfan549
Regular Contributor

Re: USDA cons

thank you!

Message 3 of 9
Lemmus
Established Contributor

Re: USDA cons

...besides the requirement on single-family homes that you be the primary occupant, there is no USDA restriction on who can live there with you ...you can certainly rent out a room if you wanted to after closing ...just don't cite that as an income source in your application Smiley Wink

 

...the primary "cons" to a USDA loan are the income limitations prior to closing, location restrictions to "rural" areas, and home "size" limits ...however the income limits are matched to the area cost of living and most low to middle income earners can qualify, the definition of "rural" is fairly loose and many suburban areas fall within the guidelines (just look at the map on their site), and home size limits are flexible depending on your family size ...they just won't finance a mcmansion.

 

...the real con is dealing with the government bureacracy/attitude and their annual wait for funding if you apply when funds are short ...on the other hand, they are a very good mortgage source for a lot of people who for one reason or the other can't find one at a decent rate.


Helpful Links: Do I Qualify? | Mortgage Calculator | USDA Mortgages | Opt Out | FICO Versions
Last HP: 11/04/15 | myFico 3B Jun 10 '15:FICO8 EQ - 752 | TU - 763 | EX - 750
Message 4 of 9
netsfan549
Regular Contributor

Re: USDA cons

every city i type in doesnt qualify for a "rural" area lol. wth.. And thank you lemmus

Message 5 of 9
Lemmus
Established Contributor

Re: USDA cons

...try using the map to zoom in to areas you'd like to live, it gives a lot more info than just typing in city names does ...or find your local USDA office and give them a visit, could be well worth your time ...on the other hand, if your definition of rural includes reading your neighbor's newspaper through your window, maybe USDA just isn't for you Smiley LOL


Helpful Links: Do I Qualify? | Mortgage Calculator | USDA Mortgages | Opt Out | FICO Versions
Last HP: 11/04/15 | myFico 3B Jun 10 '15:FICO8 EQ - 752 | TU - 763 | EX - 750
Message 6 of 9
Anonymous
Not applicable

Re: USDA cons

USDA Direct is more complicated and the process longer then a USDA Guaranteed.

Which one are you asking about?

 

I can personally say Guaranteed was a snap and fast to close on.

Message 7 of 9
Anonymous
Not applicable

Re: USDA cons

The con for us was the deferred student loan issue. We had to go FHA because of the 1% rule.
Message 8 of 9
Anonymous
Not applicable

Re: USDA cons

I'm looking into the USDA loans, what issue did you have with defferred loans?

Message 9 of 9
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