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The inability to qualify for a conventional mortgage product doesn't mean you can't make your dream of owning a home come true. Federally backed programs such as USDA loans can provide a practical and affordable alternative for many buyers.
Orrstown Bank is your best resource for USDA loans in PA and MD that can provide a pathway to homeownership for low-to-moderate-income buyers in rural and suburban areas. Our professional loan officers will provide excellent service throughout the process.
What Are USDA Loans?
The United States Department of Agriculture’s Guaranteed Rural Housing Program helps families in rural areas purchase owner-occupied properties with no down payment. Loans are insured by the USDA and are available through private lenders like Orrstown Bank.
The USDA home loan requirements include:
- Location: The property must be located in an eligible rural area as determined by the Rural Development Program. The definition of "rural" is not overly restrictive, and suburban properties in areas with a population of 20,000 or less may also be eligible.
- Income: Applicants must meet income eligibility requirements per the applicable program. These guidelines vary depending on state and region, although the buyer's income generally cannot exceed the area's median income by more than 15%.
- Closing cost assistance threshold: The seller may pay the borrower’s costs at up to 6% of the sales price.
- Owner-occupied single-family properties only: The home must be the buyer's primary residence. Duplexes, vacation homes and properties purchased for investment purposes are not eligible.
- Affordability: Borrowers must be able to afford housing payments, including monthly debts. In general, borrowers should have a debt-to-income ratio no higher than 41%, although those with solid credit scores and stable employment histories may receive more leniency.
- Credit requirements: Borrowers must have an acceptable credit history. Most lenders require a minimum FICO score of 640 for a USDA loan.
What Are the Benefits of USDA Loans?
USDA loans offer many advantages for prospective borrowers:
- Zero down payment: For many homebuyers, 100% financing is the most attractive USDA loan feature. Unlike FHA programs that require a minimum down payment of 3.5% of the home's purchase price, it's possible to get into a home with no money down.
- Low rates: USDA mortgage rates are typically below-market in most areas, which can reduce monthly payments and long-term interest costs.
- No pre-payment penalties: Homeowners won't incur fees when paying the loan off early or refinancing or selling.
- Lower closing costs: Buyers can negotiate with the seller to pay some or all the closing costs (up to the maximum limit) or roll them into the loan.
- Affordable PMI: Although borrowers making a down payment of less than 20% of the purchase price must carry private mortgage insurance, the rates are the lowest of any loan program.
Why Choose Orrstown Bank for USDA Loans in PA and MD?
Shippensburg, PA-based Orrstown Bank has been a trusted financial institution for more than a century. Although we've experienced substantial growth since our founding in 1919, we're still a community-oriented bank that makes service our top priority. You'll enjoy a high-touch, transparent lending process that removes the burden from your shoulders. Our local presence and access to innovative technologies enable us to speed up the closing process, allowing you to get into your home sooner.
Contact Us to Learn More About USDA Loans
Contact our friendly loan officers to find answers to your questions and get our current USDA mortgage rates. You can also start the process online. Begin by determining how much home you can afford, then get pre-qualified and complete and submit the application.
Important Notice: Interest Rates and Maximum Loan-to-Value may be based on Credit Score, Property Type, Occupancy, Purpose, Investor, Insurer, Loan to Value and other factors. Additional investor, insurer and Orrstown Bank criteria/conditions apply to all products. Information provided is for illustrative general use only and does not contain all qualification and automated underwriting approval requirements. Orrstown Bank reserves the right to change this information at any time. Meeting any of the criteria does not constitute a commitment to lend.