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USDA Loan and First Time Home Buyer

I want to buy my first home hopefully in the range of 150,000 or below. I have good credit and a very stable teaching job. I just started this year and was previously in graduate school for two years. I have about 6000$ in savings and am hoping to increase that total. I know I should have more before I buy, but I'm wondering how much mortgage companies are looking for you to have in the bank.? I have a low debt to income ratio, but I do still have monthly student loan payments. I know that USDA loans do not require a down payment. Would this be a good option for me in my current situation? Also, should I try to talk to a realtor before I get pre-approved or pre-qualified? 
  • February 21 2014 - US
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Answers (3)

In my opinion the USDA RDL is one of the best loan programs going other than a VA loan. $0 Down Payment, low Monthly Mortgage Insurance, easy credit qualifying. For a USDA loan we don't want to see a bunch of money in the bank, remember this loan program is designed for low to moderate income people. Moreover the USDA has a non written law that states, "If you have enough funds to go Conventional or FHA, then you should go that way. For an USDA, you should have 3-4% of the purchase price in the bank to cover your closing costs. We don't require ANY reserves on a RDL. Great loan! Processing Time once the file is underwritten can vary. For example in CA the USDA is only taking 3-4 days, while in Florida or Utah it can take as long as 30 days to get loan commitments. Every state is different. Let me know if you need any assistance by clicking on my Profile.
  • February 24 2014
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typically USDA loans are by far the best option for a home buyer (if they qualify for it!), Its a VERY hard product for any mortgage broker to compete with. USDA has a local list of towns that are approved (typically if a town is considered a "City" or has a "town sewer system" it will not be on the approved list), also, the buyer must NOT be qualified to purchase under "another" loan program. You as a full time teacher (banks love teachers, police, fireman, etc.) may have trouble to qualify for USDA if you have the ability to go FHA or otherwise.

I'm just a fancy Realtor, so best to talk to a mortgage specialist who does USDA loans to see if you qualify! (its a wonderful program that's hard to beat!)
  • February 22 2014
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Hi Bridgette, USDA is restricted to only approved rural areas. Depending on where you are looking to buy that may be a good fit. Conventional loans require a minimum of 5% down in most cases. FHA loans require 3.5% down. VA loans (if you are a Veteran) have no down payment required. Many cities and non profit organizations offer first time home buyer down payment assistance programs that can be used in combination with the programs mentioned above. Citizens Charter One Bank where I lend actually has our own first time home buyer program that offers no down payment and no monthly PMI (private mortgage insurance) and reduced rates which is a wonderful product to consider. Hope that helps! Reach out via my profile for other questions.
  • February 21 2014
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