Known for its forests and mountains, much of Colorado is rural. If a rural or suburban setting matches your life expectations, you could apply for a USDA loan and benefit from a 0% down payment loan. USDA loans are backed by the Department of Agriculture and are meant to revitalize rural areas and communities. There are several USDA-eligible area opportunities across Colorado where prospective home buyers can find a home that fits their needs.
At Society Mortgage, we specialize in the USDA loan process and can provide Colorado residents access to the homeownership ladder.
Understanding Colorado USDA Loans
A rural housing USDA loan is a mortgage product guaranteed by the United States Department of Agriculture as part of its Rural Development program.
These loans were created to promote homeownership in rural and eligible suburban areas across Colorado, from the Eastern Plains to the Western Slope. While urban areas like Denver, Colorado Springs, Boulder, or Aurora are excluded, many rural and suburban areas do qualify for a USDA loan.
The great advantage of these loans is that they require a 0% down payment and come with favorable interest rates.
Benefits of Colorado USDA Mortgage
No down payment
USDA loans stand out in the mortgage landscape because they provide 100% financing. In other words, you are purchasing a home with no down payment required. Many homebuyers struggle to save enough towards a substantial down payment. The Colorado USDA rural housing market is already competitive enough; saving towards a down payment makes it even harder. With USDA loan eligibility, things are easier and more accessible.
Low interest rates
USDA loans come with lower interest rates compared to conventional mortgages. Bearing in mind that interest rate increases monthly mortgage payments, the lower the rate, the less money you need to pay every month. Also, monthly mortgage insurance premiums are often more affordable than other types of mortgages, such as FHA loans.
Closing costs
USDA home loans allow sellers to contribute to closing costs, up to 6% of the home’s value. Eligible borrowers can also include home repairs and improvements in their loan amount.
Flexible credit requirements
USDA loan programs come with flexible credit requirements, which is very helpful for first-time homebuyers who may not have excellent credit scores. Get in touch with Society Mortgage, and we will help you find the best home loan for your needs.
Colorado USDA Loan Requirements
USDA-eligible areas of Colorado
The main requirement is property eligibility. This means that the property must be located in a USDA-eligible area. Cities and town centers don’t qualify, but some suburbs and all rural areas do.
Income Eligibility
To purchase a home, your household income must not exceed 115% of the median income for your area. For example, income limits vary significantly between regions like Summit County and Morgan County. In general, USDA income limits for Colorado stand at $121,050 for a household of 1-4 members.
If you are a first-time home buyer, Society Mortgage can help determine if your income falls within the acceptable range for your location.
Primary residence
The property must serve as your primary residence for a specific length of time, during which you can’t rent it or use it as an investment.Â
It must also meet USDA property standards. These are there to check that the home is safe, functional, and modest in size and design. Most single-family homes, including new construction, existing homes, and manufactured homes that meet specific criteria, are eligible.
Income and employment
Qualified borrowers should have a stable income and a two-year employment history.
Credit score
Rural housing loans require a minimum credit score above 640, though exceptions may be possible in certain circumstances. A USDA housing lender like Society Mortgage will assess several factors, such as your credit history and debt-to-income ratio (DTI).
Debt-to-income ratio (DTI)
USDA lenders want to confirm that you can repay your low monthly mortgage. Your DTI should ideally be less than 41%, and you must show that you can afford property taxes and homeowner’s insurance as part of your ongoing homeownership responsibilities.
The USDA Loan Application Process
At Society Mortgage, we have streamlined the USDA loan application process.
Our Loan Officers know all the details regarding USDA loans. They will review your financial situation and help you gather the necessary documentation. We work closely with USDA officials to get you pre-approved.
The application process requires several key documents and verifications. You’ll need to provide recent pay stubs and W-2s from your employment, as well as tax returns from the past two years.
Bank statements showing your financial history and stability are helpful, along with employment verification and documentation of your credit history. Our team will help you organize and submit all necessary paperwork.
Why Choose Society Mortgage for Your USDA Home Loan
As a trusted Colorado lender, Society Mortgage brings extensive experience in USDA loan processing. We know the USDA mortgage loan process, eligibility requirements, and the details behind this type of loan. For example, USDA loans must be approved by the Department of Agriculture, so we know how to deal with the process and expedite your application.
We understand the local Colorado property market. We know which areas qualify under the USDA requirements and can help find a property that fits within your income eligibility.
Getting Started with Society Mortgage
Are you looking to buy a home in Colorado? Contact Society Mortgage today to speak with a USDA mortgage loan specialist. We’ll help you understand rural area eligibility and explain the process in detail. Once we have checked your finances, we will make the process as quick and effortless as possible, making Colorado your forever home.
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