If you want to buy a home in Denver, CO, you might want to avail of a USDA loan. For those who are eligible, it means several benefits such as low interest rates and zero down payment. However, do not dive in for a USDA loan before understanding what it is all about.
In this post, we will take you through seven critical factors that you should know about before looking for houses to buy in Denver so that you will know whether it is the right choice for you.
1. Eligibility Requirements
Several requirements must be made before you are eligible and can avail of a USDA loan. The main ones are the location of the property, your income, and your credit score. Let us look at each of the factors in detail.
The location where you search for houses to buy in Denver should be a rural area with less than 50,000 inhabitants. Again, the property cannot be situated in an area that is beside a city or town of this size.
Next comes the income requirements of the lender vary between borrowers depending on the total income earned and the size of the household. To prove that you have a stable income, a credit score of at least 640 is required.
In short, availing a USDA loan to buy a home in Denver, Colorado, is a lot easier than you think.
2. Loan Limits
USDA loans have an upper loan limit that you have to stay within when wanting to buy a home in Denver, CO. The main factor is the location of the property and the amount to be sanctioned depends on it. Hence, in CO, the maximum limit can vary. However, the average house price in Denver, especially for single-family homes falls in this category.
If you are looking for ideal properties that will be eligible for a USDA loan, get in touch with us at Just Livin Realty. We will help match your budget under the USDA loan and the property that matches your needs.
Explore other financing options if you want higher-priced houses to buy in Denver.
3. Funding Fee
If you are taking a USDA loan, you must pay a one-time funding fee. It is the amount that is to be paid at closing and offsets the cost of running the program. This fee depends on the type of loan availed and the amount of down payment you make on the average house price in Denver that is selected by you. You can have this funding fee included in the amount of the loan sanctioned to you. However, this will also increase your monthly mortgage payments, impacting how much of a house you can afford.
4. Property Requirements
To be eligible for a USDA loan, the property you’re buying must meet certain requirements. It must be located in a designated rural area, and it must be your primary residence. The Denver property in question must also meet specific safety and health standards, and it must be appraised by a USDA-approved appraiser.
5. USDA Appraisal
As mentioned above, the property you’re buying must be appraised by an authorized USDA-approved appraiser. The USDA appraisal is different from a traditional appraisal in that it focuses on the condition of the property and whether it meets the USDA’s minimum property requirements. The USDA appraisal is also used to determine the value of the property, which is important for determining the loan amount.
6. Closing Costs
Like any other type of mortgage, there are closing costs associated with a USDA loan. However, the USDA has strict rules about what fees can be charged to the borrower. Some fees, such as the appraisal fee and credit report fee, must be paid by the borrower, while others, such as the underwriting fee and document preparation fee, can be paid by the seller. It’s essential to work with a lender who is familiar with USDA loans and can help you understand the closing costs associated with your loan so that you aren’t surprised when you get to the closing table.
7. Choosing a Lender
Finally, it’s important to choose a lender who is experienced in USDA loans. Not all lenders offer USDA loans, and those that do may not have the same level of expertise. Look for a lender who has a good reputation and can guide you through the process of getting a USDA loan. You may also want to consider working with a lender who is familiar with the Denver real estate market, as they may have a better understanding of the local market conditions and what you will be able to buy with your loan.
Using a USDA loan to buy a house in Denver can be a great option for eligible homebuyers. However, it’s important to understand the eligibility requirements, loan limits, funding fees, property requirements, USDA appraisal, closing costs, and choosing a lender. By working with a knowledgeable lender and understanding the process, you can take advantage of the benefits of a USDA loan and achieve your dream of homeownership in Denver.
Are you ready to buy a Denver home using a USDA loan? Just Livin’ Realty Group can help! Reach out to our team today to learn more about how we can help you! 720-730-2289