USDA loan program offers home buyers financial resources when they purchase Colorado homes or properties. Using USDA mortgages, borrowers find relief from needing to ask family and friends to pay account closing costs and other unexpected fees.
Following are important considerations to determine which properties and home buyers may qualify for USDA home loans in Colorado.
- The property must be located in a rural area. For the purposes of the USDA loan, the home may be in an open country area or in a city with a population under 10,000 residents. On occasion, the local USDA Rural Development field officers are able to make exceptions in cities with populations under 25,000 residents.
- The home needs to meet state and local home-standard requirements to qualify for the USDA home loan products. For example, the foundation and framing must be solid.
- For new construction the builder must provide a certificate of occupancy and a one-year guarantee on the home.
- Inspections are required for older homes as well as homes that are less than a year old.
- The borrower must be a citizen of the United States, a non-citizen National, or qualified Alien.
- The borrower may not own a home within commuting distance of the property and must live in the USDA-financed home on a permanent basis.
- Each borrower must be unable to qualify for a traditional home loan, for example must not have enough in their account for the required 20-percent down payment.
- USDA home loans require satisfactory credit history, payment history, and maximum 41 percent debt-to-income ratio.
- Total amount of loan payment, taxes, and insurance may not exceed 29 percent of gross monthly income of the household.
- Income restrictions apply in certain geographic locations. The income strength of the entire household - all persons who will be living in the home - may also be factored in to the qualifications of an applicant.