USDA Strengths and Limitations

The USDA home loan program is a great resource for potential home buyers looking to buy a property with no money down.  But like any other program, it has its strong points and limitations that agents and potential borrowers should know about.

The benefits of the program include: no down payment required, the seller can pay some or all of the closing costs (up to 6% of the sales price), no cash reserve requirements, borrowers do not have to be first time home buyers, there are no loan limits or sale price limits and closing costs can be financed into the loan if the appraised value comes in higher than the sales price.

The limitations on the program include: the property must be in what is considered a “rural” area (see eligible areas section on the navigation bar above), there is a maximum income limit based on family size and the county that the property is located in (these limits are fairly liberal though), and properties with second units, granny flats, barns or other large structures aren’t allowed.

Fortunately, the program strengths far outweigh its limitations, and if you find a property in an eligible area, and you are within the income guidelines, USDA financing will give you a lower payment and require less money out-of-pocket than just about any other low or no money down loan program available.

If you have specific questions that you can’t find an answer for, or you have questions about qualifying about a USDA loan in the state of California, please feel free to contact me at the e-mail address or numbers below.

Baxter Scruggs is a mortgage banker specializing in USDA loans in California, NMLS #156370. He can be reached at, or at 760-497-7705, or toll-free at 877-347-0004, ext. 226. Licensed by the California Department of Business Oversight under the California Residential Mortgage Lending Act.  The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Terms and conditions apply, all loans subject to underwriter approval. Subject to change without notice. Guild Mortgage Company NMLS #3274

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3 Responses to USDA Strengths and Limitations

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