I'm shopping for a USDA loan

7 Replies

I'm currently looking for a USDA loan on around a $200k mortgage. Anyone out there deal with this on a regular basis? I have found a few lenders but I'm shopping around the rest of this week and ready to sign paperwork next week.

@Derek E. Lots of lenders do these. The SFR loans are for owner occupied only. MFRs are for NON-owner occupied.

Minimum credit score is 620, though some lenders want a slightly higher score than USDA requires, which is called an "overlay".  The other key feature is $0 down payment.  We normally figure $6K for closing costs here in MA.

The only risk to these I know of is that sellers might decline your offer because you have very little skin in the game.  

They or their agents fear - with good reason - that if you found a much better home tomorrow, you could walk away and lose almost nothing.

I always recommend that my buyer clients put down the largest deposit they can to minimize the seller's worry.

Originally posted by @Charlie MacPherson :

@Derek E. Lots of lenders do these. The SFR loans are for owner occupied only. MFRs are for NON-owner occupied.

Minimum credit score is 620, though some lenders want a slightly higher score than USDA requires, which is called an "overlay".  The other key feature is $0 down payment.  We normally figure $6K for closing costs here in MA.

The only risk to these I know of is that sellers might decline your offer because you have very little skin in the game.  

They or their agents fear - with good reason - that if you found a much better home tomorrow, you could walk away and lose almost nothing.

I always recommend that my buyer clients put down the largest deposit they can to minimize the seller's worry.

Thank you for all of the advice. We are looking at a SFH and it will be owner occupied. The house has been on the market a long time (been asking way to much for our current local market) They just came down to a realistic price that we can negotiate with. Our market isn't hot, so I'm sure the sellers are just happy to have someone interested at this point lol.

I have already checked that our property meets the eligibility requirements and our income also meets the requirements. Just not sure if there is something else that I am missing.

@Derek E.  It sounds like you should be in the driver's seat then.

You might consider working with a strong real estate agent on the purchase.  We tend to be pretty good negotiators.

If not, don't forget to make your offer with both a home inspection and financing contingency.  

You should also include septic inspection and if a new system is required, approval of the new design.  That way if there's a 4 foot high mound in front of the bay window, you can still get out of the deal.

Also remember lead paint, etc.  These are the places where a good agent can help.

Originally posted by @Charlie MacPherson :

@Derek E.  It sounds like you should be in the driver's seat then.

You might consider working with a strong real estate agent on the purchase.  We tend to be pretty good negotiators.

If not, don't forget to make your offer with both a home inspection and financing contingency.  

You should also include septic inspection and if a new system is required, approval of the new design.  That way if there's a 4 foot high mound in front of the bay window, you can still get out of the deal.

Also remember lead paint, etc.  These are the places where a good agent can help.

Duly noted. I am going through a local Broker. We live in a Tri-State area. The agent we normally use is not licensed in this state, but she did recommend her Broker (duh right?)

I will def be sure to put home inspection and financing contingency in there. Any other suggestions or things I should ask our Broker? I'm definitely wanting someone who is a good negotiator. I'm a firm believer that most of your profit/equity, etc is bought on the front end through negotiations as opposed to the sale on the back end lol.

@Derek E.  Too many variables to know what else should be negotiated.

I would also be sure to work with a full-time agent.  "Part Time Patty" is the bane of our business.

Originally posted by @Charlie MacPherson :

@Derek E.  Too many variables to know what else should be negotiated.

I would also be sure to work with a full-time agent.  "Part Time Patty" is the bane of our business.

So I should find an actual agent who works for the broker as opposed to using the actual broker? Can you explain why? I might be to far along to make a switch. The broker has already set us up to officially view the place on Friday.

@Derek E. The broker should be fine.  I'm assuming that he knows his or her stuff.

I would advise against using an agent who isn't full time, as they tend to have less experience and some treat real estate as more of a hobby than a profession.

Someone who is the actual broker for an agency is unlikely to fall into that category.