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    Maryland USDA Loan Guidelines

    Borrower Eligibility

    • U.S. citizens
    • Permanent resident aliens
    • First time homebuyers allowed
    • Non-occupant co-borrowers NOT allowed

    Commitment Fee

    • USDA charges a 1% Commitment Fee
    • Commitment Fee can be financed into the loan
    • Example:
      • Purchase price – $100,000
      • Base Loan amount – $100,000
      • Commitment Fee – $1,010 ($100,000 [purchase price] /.99 – 100,000)
      • Maximum financed loan amount = $101,010
    Your USDA Guaranteed Rural Loan Financing Specialist

    Downpayment Requirement

    • No down payment is required
    • If borrower has adequate liquid assets (i.e. 20% of the property purchase price) to obtain conventional financing the borrower may be ineligible for the USDA Rural Development Loan

    Eligible Properties

    • Must be in an eligible USDA Rural Development Location
    • Owner-occupied properties
    • Existing attached & detached single family residences
    • New construction with permanent financing only
    • PUD’s (i.e. Townhomes)
    • Condo-units. HUD, VA, FNMA or FHLMC approved project
    • Log cabin homes, provided Appraisal Report lists other comparable log cabin homes that have recently sold in the area

    Ineligible Properties

    • Co-ops
    • Mixed-use
    • Condotels
    • Manufactured homes
    • Single Family Homes where the land value excess 30% of the appraised value and can be sub-dividend.

    Loan Amount

    • Minimum loan amount: $80,000 standard purchase/refinance transaction. $120,000 for construction and renovation transactions. (Note, this is an internal lender guideline. The USDA Loan program has no minimum loan amount guideline. If you are purchasing a house with a price less than $80,000 contact other lenders to determine if they will service your mortgage requirements.)
    • Maximum loan amount: No limit. The maximum loan amount that a borrower can qualify for will be determined by the borrowers debt to income ratio and Guaranteed Underwriting System’s findings

    Maximum Income Amount

    Maximum Loan-To-Value

    • Maximum loan-to-value is 101.01%

    Maximum Mortgage Amount

    • None

    Minimum Credit Score

    • Middle Credit Score – 640 for each applicant for GUS automated underwritting approval
    • Middle Credit Score – 580 for each applicant for manual underwritting approval and a documentable rent history within the last 12 months

    Monthly Mortgage Insurance Premium (MIP) Requirements

    • USDA requires a monthly mortgage insurance premium with an annual factorial of .35%

    Multiple Property Ownership

    • USDA primarily often won’t allow applicants to own other properties
    • Exceptions include when the other property owned is:
      • Not owned in the local commuting area as the new property; or
      • Not structurally sound and/or functionally adequate
    • Manufactured home not on a permanent foundation

    Occupancy Type

    • Owner occupied only

    Qualifying Ratios

    • 29/41% debt-to-income (DTI) – Target
    • 33.99/45.99% debt-to-income (DTI) – With compensating factors such as:
      • 680 or higher credit score
      • No or low “payment shock” – less than a 100% increase in proposed mortgage payment Vs. current rental housing expenses
      • Fiscally sound use of credit
      • Ability to accumulate savings
      • Stable employment history with 2 or more in current position or continuous employment history with no job gaps
      • Cash reserves available for use after settlement
      • Career advancement as indicated by job training or additional education in the applicants profession
      • Trailing spouse income – as a result of a job transfer, the house is being purchased, prior to the secondary wage-earner obtaining employment. If the secondary wage-earner has an established history of employment and has a reasonable chance to obtain new employment in the area
      • Low total debt load

    Occupancy Type

    • Owner occupied only

    Seller Contribution

    • 6% of sales price towards closing costs, prepaids, discount points, buydown fees, and upfront Commitment Fee

    Transaction Types

    • Purchase
    • Rate/Term Refinance on existing USDA loan

    Receive loan approval from an approved USDA lender

    • To determine your eligibility for a mortgage loan complete a loan application using our secure encrypted online application.
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