USDA Rural Development Loans

Frequently Asked Questions & Resources

For USDA Rural Development Loans

• What documents do I need for the pre-approval process?

  Generally speaking, documents needed for the pre-approval process include source of employment, income, and assets. Different loan options may require additional documentation, so please download our list of Documents Needed for Loan Application to use as a guide. Upon initial application, providing as much on this list as possible will allow us to work your pre-approval quickly and efficiently.

  Documents Needed for Application
• Loan Calculators

  See what loans best work for you and your budget with these handy loan calculators.

  Mortgage Calculator
• What is the process for a first-time homebuyer?

  Buying your first home can be stressful, confusing, overwhelming, and exciting at the same time.  We are ready to guide you through this process.  Our first step will be the prequalification or preapproval process, which is analyzing your credit, income, and employment history.  This step involves calculating the maximum loan amount, calculating your monthly payment and funds needed for closing.  Once the mortgage prequalification or preapproval process is completed, we will educate you on all mortgage loan options and help you choose the best fit.  After you are “pre-approved”, you will meet with your realtor to begin your dream home search.  The prequalification or pre-approval process takes from a few hours to a few days, depending on each applicant’s situation.  

  Get Pre-Approved
• What is a pre-approval letter and how do I get a pre-approval letter?

  A pre-approval letter is issued by a mortgage expert after the analysis of your credit, income, and employment history. This letter will be presented to the seller of a property to verify you qualify for the offer price you are presenting. You can begin the pre-approval process with our short online application or a brief phone call with one of our mortgage experts. You will be asked to provide your income, employment and asset documents for review, and a hard credit pull will be completed.

  Get Pre-Approved
• How long before a pre-approval expires?

  Pre-approval status is valid for 120 days, which is the length of time before your credit report expires.  If your employment status and existing credit remains the same, with no increase of credit card balances or new loans opened, your pre-approval status should not change after 120 days.
• Helpful “Do’s & Don’ts” when applying for a mortgage

  Do

  • DO Keep originals or be able to access on your employer/bank websites all pay stubs, bank statements and other important financial documents.
  • DO Provide your Earnest Money Deposit from your own personal bank account or acceptable gift funds. Please talk to your Loan Officer or Loan Coordinator for additional clarification. This will present a very difficult problem if not managed properly in the beginning.
  • DO Provide all documentation for the sale of your current home, including sales contract, closing statement and employer relocation/buy-out program, if applicable.
  • DO Notify your Loan Officer or Loan Coordinator if you plan to receive gift funds for closing. Gift funds are acceptable only if certain criteria are met. Advances from credit cards for down payment/closing costs are never acceptable.
  • DO Notify your Loan Officer or Loan Coordinator of any employment changes such as a recent raise, promotion, transfer, or change of pay status (for example, salary to commission).
  • DO Be aware that a new credit report could be pulled just prior to closing.

  Do not

  • DO NOT Close or open any asset accounts or transfer funds between accounts without talking with your Loan Officer about the proper documentation required for your loan. For example, before transferring all funds from your savings to your checking, check with your Loan Officer.
  • DO NOT Deposit any monies outside of your automated payroll deposits, particularly cash or sale of personal property, without notifying your Loan Officer or Loan Coordinator. Many guidelines require substantial documentation as to the source of these deposits.
  • DO NOT Change jobs/employer without inquiring about the impact this change might have on your loan.
  • DO NOT Make major purchases prior to or during your contract, such as a new car, furniture, appliances, etc. as this may impact your loan qualification.
  • DO NOT Open or increase any liabilities, including credit cards, student loans or other lines of credit during the loan process as it may impact your qualifying loan amount.

  Download Priority Mortgage Do's & Don'ts PDF
• What is the minimum credit score?

  Minimum credit score varies depending on the loan option. Please visit our Loan Options section for minimum credit score for each loan program.

  Loan Options
• Useful information about credit score

  Your Credit Score
• What if I have no credit score?

  No score credit guidelines vary per loan option. Contact our mortgage experts for more information.

  Contact Us
• What if I have less than perfect credit?

  Everyone’s opinion of less than perfect credit is different.  You should take the first step and begin the pre-approval process to see where you stand.  If you fall short of getting pre-approved, we will guide you with ways to better your situation for your future mortgage application.  We have pre-approved several past clients who did not think they could get pre-approved.  This might be you, so don’t delay in completing an application with Priority Mortgage Lending, Inc.

  Apply Now
• How do I know which mortgage loan option is best for me?

  There is no simple formula to determine the best loan option. We recommend starting the pre-approval process to allow our mortgage expert to analyze your credit, income, and asset documents. Our mortgage expert will create worksheets for each loan option in which you qualify and educate you on the differences. Together we will determine which loan option is best for you.

  Loan Options
• What does my mortgage payment include?

  Principal + Interest + Home insurance + Flood insurance (when required) + City and Parish property tax (if escrow account) + PMI (RD, FHA or if greater than 80% loan to value on Conventional)
• What is debt to income ratio?

  Debt income calculation is used to calculate the maximum house note a borrower qualifies for a purchase or refinance loan. This calculation includes the sum of all monthly payments on credit card(s), installment loan(s), child support payment(s) and new mortgage loan payment divided by gross monthly income. Each loan option has different guidelines for maximum debt ratio. Contact our mortgage experts to begin the pre-approval process which includes calculating your debt-to-income ratio.

  Get Pre-Approved
• How do I know how much house I can afford?

  Your qualifying purchase price or loan amount depends upon your gross monthly income and your total outstanding monthly loan payments. These two numbers allow us to calculate your debt-to-income ratio, which is part of the pre-approval process. Each loan option has different debt ratio guidelines, so contact our mortgage experts for more details.

  Get Pre-Approved
• Do I need a 20% down payment to buy a home?

  You do not need a 20% down payment to buy a home. Rural Development and VA loan options do not require a down payment. FHA loan option requires 3.5% of the sales price as a down payment. Conventional loan options requires a minimum of 3% of sales price as a down payment. Visit our Loan Options page for details on each loan program.

  Loan Options
• What are Closing Costs and Prepaids?

  Closing cost are third-party one-time fees associated with a purchase or refinance home loan. Examples of third-party fees, but not limited to: appraisal fee, credit report fee, lender fees (origination, underwriting, processing, administration), flood certificate, tax service, title company fees, lender’s title insurance, recording, etc.

  Prepaids are recurring expenses which will continue for the life of your mortgage. Examples of prepaids: interest, home insurance, flood insurance (if applicable), city and parish property taxes.
• Who pays Closing Costs & Prepaids?

  Buyer is responsible to pay closing costs and prepaids unless negotiated for seller to pay at closing. Appraisal fee is paid upon order, all other closing costs and prepaids are paid the day of closing. Funds for closing costs and prepaids must be verified from an acceptable source at least 2 weeks before closing.
• Can I add Closing Costs & Prepaids to my new mortgage loan?

  Purchase: Rural Development is the only loan option which allows the addition of closing costs and prepaids to your purchase mortgage balance. The appraisal value is needed to determine if and how much closing costs and prepaids could be added to the mortgage balance. No other loan option allows the addition of closing costs & prepaids to your purchase mortgage balance.

  Refinance: Closing costs and prepaids can be added to your loan balance as long as your home appraisal value allows for equity to add this amount to your loan balance.
• What is an escrow account?

  An escrow account is a non-interest-bearing account managed by your mortgage lender for the collection and payment of yearly insurance and property tax bills. The monthly escrow payment is calculated by adding yearly insurance and property tax amounts, then dividing this sum by 12 months. This escrow payment is added to your principal and interest mortgage payment. Your mortgage lender will collect from the borrower on a monthly basis to pay insurance and property tax bills on a yearly basis. Flood insurance is escrowed only if the home is in a flood zone.
• Is an escrow account required on all loan options?

  An escrow account is not required on conventional lending if the loan amount is at or less than 80% of home value.  All other loan options require an escrow account no matter the loan to value. 
• Why work with a Mortgage Broker?

  Working with a Mortgage Broker can save you both time and money. Mortgage Brokers can provide access to different lenders, loan types and rates. You will save time by completing one mortgage application versus a new application with each lender. Mortgage Brokers expertise allows them to not only find you the best rate but to help you understand exactly what each loan option offers you. Mortgage Brokers offer personalized service, more loan options and opportunity to shop mortgage rates.