The U.S. Department of Agriculture might have the government’s least known mortgage assistance program. In 2014, as part of its Rural Development program, the USDA invested almost $20 billion to help nearly 140,000 families buy and improve their homes. The program is designed to “improve the economy and quality of life in rural America” and does so through offering low interest rates and no down payment mortgages for low income families in rural regions (though metropolitan areas are excluded, pockets of opportunity exist in suburban areas).
When it comes to USDA loans in Colorado, there are three loan programs available under the USDA:
- Loan guarantees – the USDA will guarantee a mortgage issued by a participating lender, like an FHA or VA loan, allowing low interest rates and low or no down payments. These loans will require mortgage insurance, however.
- Direct Loans – Issued by the USDA, these mortgage loans are available to low and very low income applicants. With subsidies, interest rates on these loans can be as low as 1%. Income limits vary by region.
- Home improvement loans and grants – Both loans and outright financial awards permit homeowners to upgrade and repair their homes. Loan and grant packages can provide up to $27,500 in assistance.
To be eligible for a USDA-backed loan in Colorado, an applicant must meet certain income limits. These limits vary by location and household size. Click here to consult the USDA’s map and table indicating income limits by location.
In addition to income limits, other eligibility requirements for the USDA-backed mortgage guarantee loan program include:
- USDA guaranteed home loans can only fund owner-occupied primary residences.
- U.S. citizenship (or permanent residency)
- A monthly payment that’s 29% or less of your monthly income (payment includes principal, interest, taxes, and insurance). Other monthly payments cannot exceed 41% of your income. The USDA will consider higher debt ratios for credit scores above 660.
- Dependable income for at least 24 months.
- Acceptable credit history, with no collection accounts in the last 12 months (exceptions for situations for adverse credit beyond applicant control, such as for medical emergencies).
When it comes to USDA loans in Colorado, the USDA usually issues direct loans for homes that are 1,800 square feet or less and below market value in the area for which the loan is applied. The program is designed to help those with the greatest need, defined by the USDA as an individual or family that:
- Is without “decent, safe, and sanitary housing”
- Is unable to secure a loan through tradition lending sources
- Has an adjusted income at or below the low-income limit for the location where they live.
For more information on obtaining a USDA loan, Colorado based Integrity First Mortgage will guide you through the process and answer any questions you may have. Please contact us at (719) 385-0777 office, (719) 360-3767 mobile, or email us at email@example.com.