USDA Texas Mortgage

Frequently Asked Questions

Why haven’t I heard much about USDA rural development loans?

For the last few years there have been other mortgage programs that were popular and offered zero down payment and easy qualification. There was less use for the USDA Mortgage Program during those times. Now mortgage lending programs are much tighter and USDA is one of the few remaining programs with 100% financing and very favorable terms.

How much money will I need to close?

Every transaction is different. You will usually need to pay $350 for an appraisal before closing. You can ask the seller to pay all other closing costs as long as the total amount (closing costs, escrow, 2% Fee and interest) are not more than 6% of the selling price. You may also roll your closing costs into your USDA loan.

Will the seller usually agree to pay my closing costs?

This is very common. It depends on the real estate market in your area and how motivated the seller is. Note that the appraisal will need to be equal or greater than the selling price for the closing cost seller contribution to work.

How large of a mortgage do I qualify for?

The loan officer can calculate this for you. Usually the total debt to income ratio including the PITI should be 48% or less than your monthly gross income.

How good does my credit need to be?

If your credit score is above 620 you will have a very good chance of qualifying. While this alone does not guarantee you will qualify it is necessary.

What if I have NO credit in the credit bureaus?

You will not be able to qualify without a minimum credit score of 620.

Is private mortgage insurance required?

Yes, USDA recently implemented a very small monthly mortgage insurance of .3%. This is currently about 1/4 that of FHA. USDA also lowered its up front fee from 3.5% to 2.0%.

How does this program compare to a FHA mortgage?

In most cases the USDA mortgage will be better than FHA if you qualify. USDA is 0% down and FHA is 3.5% or more down. Also FHA charges a monthly Mortgage Insurance fee which is 1.15% and USDA has a monthly Mortgage Insurance of .3%. The rates are normally very comparable.

Can I Refinance my FHA or Conventional Mortgage into a USDA Mortgage?

No. USDA will only allow a current USDA Mortgage to be refinanced into a USDA Mortgage.

Will USDA loan on homes to be built?

No. The home has to be built for USDA to lend on the home.

Are swimming pools an issue with USDA?

Yes, USDA will back the value of the pool out from the sales price and only lend on the home.

How long does it usually take to close a rural mortgage?

This can vary, four to six weeks is typical.

If I am ready to get started, what is the first step?

Visit our apply page and a mortgage specialist will contact you ASAP to start the process.

Do I have to put a down payment?

Loans may be for up to 100 percent (102 percent if the guarantee fee is included in the loan) of appraised value or for the acquisition cost, whichever is less.

Is everyone eligible for a USDA home mortgage loan?

To be eligible, applicants must:

  • Purchase a primary residence. Investment properties are not allowed.
  • Have an adequate and dependable income; Be a U.S. citizen, qualified alien, or be legally admitted to the United States for permanent residence
  • Have an adjusted annual household income that does not exceed the moderate income limit established for the area. A family’s income includes the total gross income of the applicant, co-applicant and any other adults in the household. Applicants may be eligible to make certain adjustments to gross income such as annual child care expenses and $480 for each minor child in order to qualify.
  • Have a reasonable credit history.

Does every home qualify for a USDA home loan?

Homes That Qualify:

  • New or existing homes.
  • Existing homes must be structurally sound, functionally adequate, and in good repair
  • There are no restrictions on the size or design of the home financed
  • The home must not be used for income-producing purposes
  • Homes must be located in rural areas, some city outskirt areas may qualify.

What is considered a rural area?

Rural areas include open country and places with a population of 10,000 or less and under certain conditions towns, cities, and outskirts with between 10,000 and 25,000 residents.

Can I have had a Chapter 7 or Chapter 13 Bankruptcy?

Of course. Chapter 7 Bankruptcy does require a 36 months seasoning. Chapter 13 requires a 12 month seasoning and still in the Chapter 13 you have to demonstrate you have made your payments on time for 12 months. Obviously all other qualifications have to be met as far as credit scores, debt to income ratios and so on.

If you have a question not found on here, please email me at

Why Contact Us??

We can get you a quick quote, answer any guideline questions and we will not add your email address to any kind of marketing or email drip campaign. We have access to as many programs as any bank in Texas and have a choice of a wide range of lenders.

Josh Kohl
Mid America Mortgage
12001 W. Parmer Ln. Suite 250
Cedar Park, TX 78613
Office – 512 342 1069
Fax – 512 592 7971
NMLS – 226972