Wyoming USDA Loans – USDA Rural Development Loan
Are you looking to purchase a home in a rural area of Wyoming? The USDA provides an unbeatable opportunity to buy a home with 100% financing, low interest rates, and other special loan terms. Why does the USDA provide these types of loans? The purpose of the USDA home buying program is to promote homeownership in rural areas, especially for low-to-moderate income families. By providing special homeownership programs, rural communities can develop faster and thrive.
Advantages of the USDA Rural Development Program
- No Down Payment – What is possibly the single most well known benefit of a USDA loan is that they do not require any down payment.
- Finance Your Closing Costs – You can include the closing costs (loan origination, appraisal, upfront mortgage insurance, etc.) into the loan.
- Easy to Qualify – The requirements to be eligible are relatively easy compared to conventional loans. However, they are not available to high income households or in larger cities. The programs offered by the USDA often are the only mortgage loans available to applicants, which means it can make the difference of someone being able to own their own home or not.
- Low Mortgage Insurance – The monthly mortgage insurance on USDA loans, called the “guarantee fee” is lower than it is for other government-backed mortgages such as FHA loans. For USDA guaranteed loans, the monthly guarantee fee is 0.50% of the loan amount, and is adjusted each year as the loan balance decreases, therefore resulting in monthly mortgage payments being lowered annually.
- Fixed Interest Rates – All USDA home loans are provided on a fixed mortgage rate. This means that the interest rate stays the same and does not adjust or fluctuate like they do with an adjustable rate mortgage (ARM), which can cause sudden spikes in rates and payments.
- Higher Loan Limits – While other loans such as FHA, VA, and conventional loans have strict loan size limitations, there are no such loan limits placed on USDA loans. This means that if you qualify, you might be able to get a nicer home with a USDA loan than a FHA other other type of loan.
The above USDA loan requirements reflect any changes for 2019. The actual conditions that will be required for you to be approved for a USDA loan depend on your individual situation, your employment history, credit history, and debt-to-income ratios.
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Wyoming USDA Loan Requirements
The USDA rural housing guaranteed loan program requires that you meet certain eligibility requirements related mostly to income and the property you want to buy. A great aspect of USDA loans is that the way you qualify is actually very different than it is with other home loans, such as conventional and FHA mortgages. While other programs require you to show more income, better credit, and more assets, the USDA is actually looking for those who may have a harder time getting a loan (you can still qualify with excellent credit, and even some assets, but not too much income).
The following criteria are the primary qualification requirements:
- Credit – Minimum credit score of 620. Occasional exceptions are made, but this is the standard credit requirement.
- Owner Occupied – No rental properties are allowed. You must occupy the home you want to buy with a USDA loan. Another requirement is that the home be either a single family residence, or a condo. Some USDA lenders in Wyoming will allow mobile or manufactured, but we do not offer USDA loans for these property types.
- Property Eligibility – USDA loans are intended for rural development and therefore exclusively available for homes in rural and select suburban areas. You can look up properties by address on the USDA property eligibility search. This tool also allows you to view a map with ineligible areas shaded in. USDA loans are intended for rural development and are not available to finance a home purchase in larger cities.
- Income – Income is limited to 115% of the median income in the applicable county. This means your household income can not be more than 15% above the median income for your county. The income limits for USDA loans depends on your county and how many people live in your household. The number of persons includes you, your spouse, your children, and anyone else living in your home. The USDA has a very useful income eligibility tool which allows you to calculate your eligible income, make certain deductions, and then see if your income qualifies.
- Mortgage Insurance / Guarantee Fee – All USDA loans are subject to paying the guarantee fee. You can calculate this amount using the USDA calculator below:
USDA Mortgage Calculator
Total Monthly Payment
|USDA base loan amount||$0|
|USDA total loan amount||$0|
|Principal & interest||$0|
|USDA guarantee fee 2.75%||$0|
- Price of Home – Enter the price of the home you want to buy. If you do not have a home in mind yet, just add in a number in the range you expect to want to buy a home for.
- Mortgage – The second field titled “mortgage”, is by default on a 30 year fixed loan schedule. This is the most common loan repayment schedule selected for USDA loans. You can also select a 15 year mortgage.
- Interest Rate – The interest rate a borrower receives depends on their credit, income, and other qualifying factors. To get an actual rate quote, you will need to speak with a licensed loan officer. You can call 1-800-731-3560 to get prequalified and receive a rate quote.
- Down Payment – USDA loans do not require a down payment. If you would like to put money down, reduce the amount you put into the Price of Home field to reflect how much you want to use as a down payment. So if you want to buy a $150,000 home, and plan to put $10,000 down, then add in $140,000 for the Price of Home, which will serve as your total loan amount for the purpose of calculating your expected payment.
- Property Taxes – Add the annual taxes for the home you want to buy. To find out how much the annual property taxes are, check with the county assessor. You can also ask a real estate agent to help you find out what the exact annual property taxes are for a home you are interested in.
- Annual Insurance – The amount that the annual homeowners insurance will cost depends on the property you intend to buy, your homeowners insurance claim history (if you have owned a home before, and had to make a claim), and the specific homeowners insurance company that you select to insure your home.
- Down Payment – This is the percentage that is calculated based upon the home purchase price and the down payment amount.
After submitting information into these fields, it will calculate how much the USDA mortgage payment will be based upon these numbers. The next set of data presented on the right side and shows under the total monthly payment is as follows:
- USDA Base Loan Amount -This is the amount of your loan after subtracting your down payment from the total, but prior to adding in the USDA upfront mortgage insurance premium (UPMIP).
- USDA Upfront Mortgage Insurance – All USDA loans require a 2.00% upfront mortgage insurance premium to be paid. This is calculated from the base loan amount. This 2.00% is the same for any borrower and on any type of USDA loan. It does not vary from one lender to another.
- USDA Total Loan Amount – This is the combined total of your USDA base loan amount (after subtracting the down payment), along with the upfront mortgage insurance fee. You have the option to pay the mortgage insurance amount out of pocket, or you can wrap it into the loan amount. Most decide to include it in the loan amount, so we have it automatically added on the calculator.
- Principle and Interest – This is the amount of your mortgage payment before adding mortgage insurance, and property taxes, and property insurance.
- USDA Monthly Mortgage Insurance – This is the monthly mortgage insurance premiums required on all USDA loans. This amount is 0.40% of the principle loan balance. It is recalculated each year and goes down as your loan balance does.
- Monthly Escrow – This is how much your property taxes and property insurance is after taking the annual amounts and dividing them by 12 monthly payments.
So Where in Wyoming Can You Get a USDA Loan?
USDA loans are available throughout the majority of Wyoming with its vast rural zoning. The only excluded areas which are not eligible are cities and larger towns with a population over 30,000. If you want to buy a home in these areas, and are looking for another great option, consider a FHA loan in Wyoming. For the rest of Wyoming, both remote areas and other towns such as: Cody, Evanston, Gillette, Green River, Jackson, Riverton, Rock Springs, and Sheridan. This is just a small sampling of some of the towns that USDA loans are commonly utilized in. To find out if the home or area you want is eligible, use the property search or give us a call and we can help you determine property eligibility.
Would you like to find out if you qualify or a USDA mortgage loan? We can help you get pre-approved over the phone or you can learn more and apply for a USDA loan online. Our consultation is free of charge, which will include finding out if you are eligible, how much you can borrow, and also connect you with a real estate agent familiar with these programs.
Would You Like to Get Prequalified or Apply For a USDA Loan Now?
Click Here to Get Pre-Approved for a USDA Loan
Types of USDA Loans
The way the program works is if you can meet certain qualifications you can get a home loan through the USDA directly or through a USDA lender (such as us). There are two types of USDA loans:
- USDA Guaranteed Loan – The guaranteed loan is the more common loan program and accommodates to many more ranges of income. In fact, in some areas, household incomes can be as high as $120,000. This rural housing program is known by a few different names, such as the “502 USDA Guaranteed Mortgage”, “Single Family Housing Guaranteed Loan Program”, or just “USDA Guaranteed Loan”. These all mean the same thing and are the same program.
- USDA Direct Loan – The direct loan is for the lowest end of the income spectrum, and has a lot more limitations for who will qualify. It is for individuals or families with the very low income. These loans are originated and funded by the USDA directly. We do not issue these loans, nor does any Wyoming USDA lender. You must apply through the Department of Agriculture. Again, this is only for the lowest end of the income spectrum.
USDA Loan Frequently Asked Questions:
Do USDA loans require you to be a first time home buyer?
You do not have to be a first time home buyer. You can be a previous homeowner and still qualify for a USDA loan. If you currently own a home, you must sell it though, since USDA loans are only for a primary residence, and not a second home, investment property, or vacation home.
What refinancing options exist for USDA loans?
Once you have a USDA loan from the original purchase of your home, you may be able to streamline refinance on future loans. This is the equivalent of the FHA or VA streamline programs, and is an incredible refinance product. The USDA streamline refinance provides an easy way to quickly reduce your mortgage payment. It does not require a new appraisal (the one from your original purchase is used). You do not have to submit any documentation for your job or income, and no credit check is required. It is an easy and efficient way to lower your interest rate and mortgage payment.
If I was rejected for a USDA direct loan, can I apply for the USDA guaranteed loan?
Yes, you absolutely can. Many individuals or spouses who apply for the direct loan are turned down due to not meeting the various requirements, such as those related to income, can still qualify for the USDA guaranteed loan. The direct loan is for the lowest income borrowers, whereas the guaranteed loan allows a little more than the median income to be eligible.
What is the maximum amount that I can borrow?
There are no exact loan limits for USDA loans, as there are for other loan types such as FHA and conforming (conventional). The amount that you personally can borrow will be determined mostly based upon your debt-to-income ratio. This is calculated based on your monthly income and monthly debts. The max DTI ratio (unless you have “compensating factors” such as savings or great credit), is 43%. So if you make $5,000 in combined income, your total debts (mortgage payment and other debts such as auto loans and credit cards), must not exceed $2,150/month (which is 43% of the $5,000 example we are using here).
Can I use a USDA loan to purchase a duplex?
The only way you are allowed to purchase a duplex is if you buy only one of the two units. You are not allowed to buy both units of a duplex (or 3 units in a triplex, or 4 units in a fourplex). You can only buy one unit of the multi-unit property, or a single family residence (detached home, or in plain words, your typical single unit house).
Are USDA loans available to purchase a farm or agricultural property?
In spite of being backed by the United States Department of Agriculture, USDA loans are not available for agricultural properties or farms of any kind. It is common to assume they would be, but the USDA rural housing loans are only for residential properties.