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Find the Best USDA Lenders

by Michele Lerner Mortgage & Real Estate Contributing Editor

After you understand what a USDA Rural Development loan is and know your eligibility for one, use our guide to research the best USDA lender for you. Since USDA-approved lenders must adhere to strict regulations, the difference between lenders often comes down to their previous experience with USDA loans.

Our 3 favorite lenders for USDA loans

The first questions you should ask any lender is how many USDA loans they process and in what general areas. “We are all selling in the secondary market. Because of that all of our rates are going be roughly the same,” says A.W. Pickel III, CEO of Waterstone Mortgage. “Terms will also be the same across lenders, since USDA guaranteed loans are only available in 15- or 30-year terms, and USDA direct loan terms are 33 or 38 years. Likewise, minimum eligibility requirements to qualify for a USDA loan are set by the government, so you won’t see a difference in minimum credit scores or maximum debt-to-income (DTI) ratios to apply. If your credit score is below 620 and your DTI is above 29/41, you likely won’t qualify for a USDA loan through any lender.

Perhaps the biggest mistake that a lender can do is tell someone they are qualified for a USDA loan when they’re not, so we selected our top picks for USDA loan lenders based on their experience with USDA loans, customer reviews and availability.

Our favorite USDA lender
Caliber Home Loans

Caliber Home Loans
Authorized Partner

Since USDA loan rates and terms are so heavily regulated, the fact Caliber’s app lets the user track loan progress in real time could be the tiebreaker when comparing lenders.

  • Easy-to-use mobile app
  • Available in all 50 states
  • High origination fee
  • Rates unavailable online

What we like: Caliber Home Loans provides USDA mortgage loans and refinancing, among other loan options, to eligible borrowers in all 50 states. Through the Caliber Home Loans mobile app, you can track your loan application status, securely upload important documents, easily contact loan consultants, make payments and view e-statements. Caliber also contributes to charitable causes like St. Jude’s Children's Research Hospital.

All of Caliber’s loan experts are trained in customer service too, so it’s easy to get a hold of a loan specialist over the phone. Plus, many of the senior executives cut their teeth working directly with borrowers, so they understand your priorities as a homebuyer from the top down.

What to consider: Caliber does not allow you to view their rates online, so you’ll have to contact one of their loan specialists to get an accurate and current rate. Also, even though they are licensed to service in every state, they do not have physical branches in every state. Caliber's origination fees are on the higher side of the USDA's regulations—costs vary up to $1,200.

Great customer service
HomeBridge Financial Services

HomeBridge Financial Services
Authorized Partner

HomeBridge Financial Services is a great option for prospective borrowers who want a dedicated loan officer helping through the entire process, from pre-qualification to closing.

  • Secure online portal
  • Discounts for Costco members
  • Limited branch locations
  • No mobile app

What we like: HomeBridge Financial Services offers a mix of conventional and government-backed loans, including USDA loans. You can contact a USDA loan specialist through one of their branch locations if there’s one in your area. Otherwise, you can contact them over the phone or through their website. Track the status and progress of your loan through HomeBridge Financial’s online portal, or opt for disclosures to be mailed to your home.

As a member of Costco's mortgage lender marketplace, HomeBridge is able to extend additional perks and benefits to Costco members. We like that HomeBridge Financial takes their customers’ feedback very seriously by making it a priority to personally respond to negative reviews and try to figure out what went wrong to minimize the same mistakes in the future.

What to consider: HomeBridge Financial Services doesn’t have a mobile app, and borrowers can’t electronically track their USDA loan application progress. HomeBridge Financial Services is licensed to issue USDA loans in all 50 states, but they only have brick-and-mortar locations in 30.

Good for no origination fee
AmeriSave Mortgage

AmeriSave Mortgage
Authorized Partner

AmeriSave is one of the few lenders that doesn’t charge an origination fee, and they’re a good pick if you’re most comfortable completing important transactions over the phone and online.

  • No origination fee
  • Locked-in rates
  • No branch locations
  • No mobile app

What we like: AmeriSave offers a wide selection of mortgage loan products, including USDA loans and USDA loan refinancing. In about 91 percent of AmeriSave reviews, customers were either happy or satisfied with the company and would recommend to a friend. If you get a loan through AmeriSave, you’ll be assigned a loan officer who will work with you through the whole process and help you collect important documents and information. In the pre-qualification phase, you’ll be able to get an idea of the rates AmeriSave Mortgage will be able to offer you. If you like what you see, you can start the process of pre-approval.

After you’re pre-approved, it’s easy to start uploading all the necessary documents through AmeriSave’s secure web portal. Another plus: Once you accept an approval from AmeriSave, those rates are locked in, meaning that will be the final rate you get when your USDA mortgage loan is finalized. AmeriSave will also assist in connecting you with a qualified real estate agent to negotiate your home purchase and a professional inspector to perform the appraisal.

What to consider: AmeriSave Mortgage services are currently unavailable in New York. They don’t have physical branches you can easily visit, which is what keeps their overhead low enough to waive origination fees.

How to apply for a USDA loan

  1. Verify your USDA loan eligibility
    Before you apply for a USDA loan, confirm that you meet several strict USDA eligibility requirements relating to your income, credit, repayment history and location. Applicants will be disqualified if they have outstanding federal judgements or significant delinquencies.
  2. Double-check your credit reports
    Check the accuracy of your credit reports before you apply for any mortgage, including USDA loans. Lenders will evaluate the last three years of credit history for all note signers (applicant and co-signer if present) to determine your ability and willingness to repay the loan.

    There isn’t a hardline minimum for securing a USDA loan, but if your credit score is higher than 640 the process will be much easier. A credit score below 640 is a red flag to lenders that you don’t have a consistent history of making dependable payments.
  3. Compare USDA lenders
    USDA mortgages are offered by national, regional and local lenders. The USDA does not endorse any particular lenders, but does compile a partial list of USDA-approved lenders. You can expect potential lenders to ask about your financial situation as part of the prequalification process. This should give you a sense of how much house you’ll be able to afford with a USDA loan.

    You lender will ask you about your assets, monthly debt obligations, gross monthly income and desired loan amount. Most of the time a lender will also get your permission to run a hard credit inquiry. Every application for a USDA loan must be submitted through an approved lender.
  4. Verify your USDA loan eligibility
    To get pre-approved for a USDA loan, you’ll need to provide your lender with several important documents: a government-issued ID (driver’s license or passport), W-2 statements or tax returns for the last two years, recent pay stubs, bank statements and a Social Security verification letter. The lender will then verify your information and evaluate your purchasing power and home loan affordability.

    Getting pre-approved for a USDA loan doesn’t necessarily guarantee a your home loan. There will be conditions that you’ll have to meet before an underwriter will approve your USDA loan.
  5. Find a USDA-approved home
    Once you have a pre-approval letter from your lender you can start house hunting. The only way to confirm that a USDA eligible home you're interested in is a qualified rural area is to check the USDA’s Property Eligibility Site. Simply click on the link, select the program for which you’re applying, type in the address and see it if qualifies.

    The home also must adhere to local health and safety codes. For a home to qualify for the USDA direct loan program, it must be less that 2,000 square feet and cannot have an in-ground swimming pool, be designed for commercial activities or be worth more than the area’s loan limit.
  6. Sign a purchase agreement
    Now that you’ve found your dream house, your lender and real estate agent will help you extend an official offer. Make sure that your real estate agent is aware that you’ll be financing the house with a USDA loan, as that will impact how they draw up your offer. For example, if you’re planning to pay $0 down, your real estate agent will negotiate so that the seller will pay for the closing costs.
  7. Schedule your USDA appraisal
    After your offer is accepted, a professional home inspection will be required to ensure that the house is up to USDA standards. If the home doesn’t adhere to USDA loan specifications, the seller will have to resolve any issues before the closing date. It is the lender’s responsibility to select a qualified appraiser to complete an inspection.
  8. Await USDA underwriting
    Before your new house can be closed on, a mortgage underwriter has to officially approve your loan application. A mortgage underwriter will review all of your information to check for major changes since your application was submitted. Some red flags to an underwriter processing a USDA mortgage loan include values inconsistent with the appraisal report, if repayment income is listed as greater than annual income or if data is incomplete for insurances or taxes.
  9. Close on your property
    Get ready to sign a lot of paperwork and then move into your new house. If all goes according to plan, the USDA and your lender will sign off on your file and you’ll be awarded a Clear to Close. If your agent is unable to negotiate the closing costs to be paid for by the seller, the USDA does allow for gift funds from friends and family to cover the costs. You’ll have to have an official letter stating that the funds to pay for closing costs were a gift from a family member or friend.

Not sure how to choose?

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    by Michele Lerner Mortgage & Real Estate Contributing Editor

    Michele Lerner, author of “HOMEBUYING: Tough Times, First Time, Any Time”, has been writing about personal finance and real estate for more than two decades. Michele writes for regional, national and international publications in print and online for a variety of audiences including consumers, real estate investors, business owners and real estate professionals.