green houseUSDA Loans are a great home financing solution for home buyers on a budget. These government-backed loans allow lower-income and moderate-income borrowers obtain financing for the purchase of a HUD-approved home in certain areas. While these areas are typically less developed or even considered rural, they aren’t necessarily far from major cities. California has numerous USDA-eligible zones, making it one of the nation’s top states for USDA financing in 2015. However, finding USDA-eligible housing in Orange County can be somewhat of a challenge.

USDA Loans – The Basics

Before we dive into the best practices for finding USDA financing in Orange County, let’s review the basics of this mortgage program.

USDA loans…

  • are insured by the United States Department of Agriculture (USDA).
  • are offered through certain mortgage lenders (like Trilogy Mortgage).
  • are designed to help low- to moderate-income households obtain affordable home financing.
  • allow up to 100% financing ($0 down payment).
  • are available to borrowers with lower credit scores.
  • are available in fixed rate terms.
  • are only available for approved homes in USDA-eligible areas.
  • are only available for borrowers who meet certain income restrictions — yes, it is possible to earn too much money to qualify for a USDA loan.

Where Can I Find USDA Eligible Homes?

The easiest resource for finding USDA-eligible property in Orange County is the USDA Property Eligibility Map. This online, interactive map shows you exactly where the current eligibility zones lie in the state of California. Zoom in to look at Orange County or put in a specific address to see if that home is located in a USDA-eligible zone.

Keep in mind that the USDA Property Eligibility Map may not always be the most up-to-date resource. For accuracy’s sake, talk to your real estate agent or your mortgage loan officer to see if a certain home is located in an eligible area. If you don’t have a specific property in mind yet, you can ask your real estate agent to target homes that are located in USDA-eligible areas. Just know that, in Orange County, that may require you to consider homes on the outskirts of towns, rather than in the city limits.

Income Restrictions

There are very specific rules when it comes to a borrower’s income for a USDA loan. Since these mortgages are designed to help foster homeownership in less developed areas and offer an affordable way to help lower income families achieve the American Dream, the USDA loan is not available to borrowers who earn above the set income limits for their area.

The general rule is your income cannot exceed the median household income for your area by more than 15%, based on the size of your household. Of course, like all loan guidelines, this can be subject to change and you should always check with a mortgage professional to see if you meet the current requirements.

Ready to learn more? Check with us to see if you meet the income guidelines for one of our no money down USDA home loans.