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USDA home loans

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Ktiz54
Established Member

USDA home loans

I want to get a USDA home loan mainly because of the no down payment option.  I was checking out websites for lenders and not that many mention the USDA.  How would I find a lender that specializes in them or at least is very familiar with them.  Do some not want to handle them because there is more paperwork?  Would that be the first step to complete an application on one of the lender websites?

 

I really want a new house but not sure I'll qualify for what the builders are asking in my area.  My credit scores are great and I have a 15 year job history with same employer so hopefully those will help me but my DTI is going to be right on the edge and I don't have any reserves to speak of.

 

Any info or advice is appreciated. 

 

 

Message 1 of 6
5 REPLIES 5
Ktiz54
Established Member

Re: USDA home loans

Also wanted to mention that I got several new credit cards about 5 months ago - is that going to hurt my approval - would it be better to wait a few more months before applying? They don't have balances I just wanted some new rewards cards with bonus offers and wasn't thinking about buying a house at the time.  Also, I have a loan on my 401K that is held out of my pay check - will that count against my DTI - or maybe not since I'm repaying myself the money each month?

Message 2 of 6
Ktiz54
Established Member

Re: USDA home loans

Sorry I keep thinking of more questions - if I get a bonus each year (about the same amount for the last 4 or 5 years) can that be included in my income?  It's a lump sum not included in my bi-weekly paychecks.

Also, I have a small home based business and have some profit from that for the last two years but the home office deduction allows me to take enough deductions that I don't pay taxes on the income - but can I include it in my income to qualify for a mortgage?

Just hoping some of these work to get my DTI down to a good level.

Thanks for reading!

Message 3 of 6
beanie7132
Frequent Contributor

Re: USDA home loans

USDA has a list of lenders on thier website. Your realtor can also point you in the direction of a lender that will work with USDA. The builder also might have a preferred lender who works with USDA. And of course a mortgage broker can help as well. 

 

The new cedit will do one of two things: require just a LOE, or the lender will ask you to close them. We had a lot of new credit in the 8 months leading up to our mortgage app, we were asked for LOEs on all, and asked to close 4 accounts. 

The 401K loan wont be too much of an issue. Like you said you are essentially paying yourself back. My LO only asked for a copy of my terms and conditions on my loan. They did not count this into my DTI. 

Your bonus pay can be counted into your income as long as it has been received for at least the past two years. They will take both years and average it out. 

If your home based business income is cancelled out by deductions, then they will not count that income. They will go over your last two years tax returns with a fine tooth comb. If you are not showing a profit then I am almost sure the income isnt counted. 

 

Good luck! I am going through the USDA process now, its been lengthy and nerve wracking to say the least. 

Message 4 of 6
Ktiz54
Established Member

Re: USDA home loans

Thanks beanie for the good info.  I've been reading some of your earlier posts and our situations are very similar (income and price of home desired).  I've got lots to learn about this whole process.  It will be my first home buying experience since I've been single - been renting for the last 12 years and really want my own home finally!

 

 

Message 5 of 6
beanie7132
Frequent Contributor

Re: USDA home loans

This is our first purchase too after 8 years of renting. I do think that a good lender and loan officer can make all the difference in how this experience plays out for the purchaser. 

We had a scare Friday-Monday with our income, they tried to tell me we were over the limit for USDA - I told them to re-calculate. Smiley Wink Thats all worked out now and we did our walkthru this morning. 

Good luck! Let me know if you have any questions, I am happy to help where I can. 

Message 6 of 6
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