The USDA loan process is similar to any other loan process with a few exceptions. The general process involves:
- Becoming Pre-Qualified with a USDA Approved Lender
- Find a USDA-Approved Home
- Sign a Purchase Agreement
- Go Through Processing and Underwriting
- Loan Closing
Get Pre-Qualified with a USDA-Approved Lender
The first step is finding a USDA approved lender such as Metroplex Mortgage Services. Then, you will begin the qualification process which is designed to determine your eligibility, provide general parameters to keep you within budget, and also what to expect for the next steps of the process!
This is an important step because it will allow you to save significant time and effort by narrowing down the homes within your budget as well as eligible areas. During this process, you should be prepared to answer qualifying which are designed to help keep you within your desired budget.
Find a USDA Eligible Property
Now that you have bene qualified, you may either find a home on your own or elect to work with a knowledgeable real estate agent to help you search for a home. Since location is the primary factor in USDA home eligibility, finding a real estate agent with USDA loan experience can help with your home search.
Offer and Acceptance (Sales Contract stage)
Once you’ve found your perfect home, you will work with your agent to make an offer. During this time you can negotiate the amount of deposit, your closing date, as well as possibly asking the seller to pay for a portion of your closing costs which is commonly referred to as a seller concession. Remember, sellers have their own costs to bear and they are not required to pay any of your closing costs unless they agree to it as part of the negotiation.
Then, once the seller has accepted your offer, one of the next steps after starting your formal loan application will be to order an appraisal. Appraisals are generally known for determining the market value of the home along with documenting that the property meets USDA minimum property requirements. Remember that the appraisal is not the same as a home inspection and should not be relied on for that purpose.
Processing and Underwriting
Next, an underwriter will review your information to as part of the lender’s approval process. Under the USDA Single Family Housing Guaranteed Loan Program, it requires loan approval from the USDA lender along with concurrent from USDA as described below.
- First, your lender will underwrite the loan file to make sure it meets all USDA requirements.
- Second, the USDA will review the underwriter’s decision according to USDA guidelines prior to issuing the USDA Conditional Commitment .
- Metroplex Mortgage Services offers both manual underwriting for borrowers who are not eligible for automated eligibility as determined by the Guaranteed Underwriting System (GUS). Make sure to ask your lender if they offer both manual and automated underwriting!
Once the underwriting process is concluded and the USDA Conditional Commitment has been received, usually the closing process will be the next step.
At closing, you will sign all necessary paperwork, finalize your USDA loan, and get the keys to your home!