USDA loans are a great way for people to hold onto reserves after purchasing a home without having to put it all into their down payments and closing costs. However, three key changes were made to the loan program between 2019 and 2020 that Justin Allender and I felt that you should know:
1. Increased income limits. Here in Lake County, a family of four can make up to $86,850 a year and still qualify for a USDA loan. You can also deduct childcare or certain elder-care expenses from your income to help you qualify. A family of five or more can make up to $114,650. These changes open the door for people who may not have been able to qualify before.
2. Calculating payments on student loans. For student loans that are on income-based repayment, deferred status, or forbearance, lenders once had to hit you with 1% of the balance in your debt-to-income ratio, which could limit how much home for which you might qualify. Moving forward in 2020, however, the USDA is allowed to reduce that down to 0.5%, which expands the pool of potential qualifiers.
3. Job history. Once, the USDA was able to use your education history as you transitioned into the workforce as part of your work experience, but now, the USDA will require a 12-month job history from applicants as a guardrail for the loan program.
If you or someone you know has questions about USDA loans, how they work, or how to qualify for them, don’t hesitate to reach out to us. For the last two years, the Success Mortgage Partners have been the No. 9 USDA lender in the state of Florida, so we’re definitely able to help you.