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Is 100% Financing Still Available For Purchasing a Home in Arizona?

USDA Home Loans - 100% Financing

If you’re interested in purchasing a home in Arizona but don’t have the available resources for a down payment, look no further than the U.S. Department of Agriculture (USDA) Home Loan.  The USDA has a guaranteed home loan program available to help individuals and families purchase a home in Arizona located in certain qualified rural areas.

How do you qualify for a USDA loan? As with most mortgage loans, you must demonstrate your ability and willingness to repay the loan in monthly installments. Your credit history and other monthly obligations will be analyzed to determine if you have the reasonable ability to meet repayment obligations on your current debts and the new mortgage payment. Additionally, you must show that you have steady and sufficient income that is enough to meet mortgage payments, as well as discretionary income remaining each month.

Credit Eligibility

If you know you have made all past credit payments on time and have a good credit history, you should be a good candidate for a USDA home loan.  If you have some “spotty” or derogatory credit, you may still be eligible for a loan, as the USDA mortgage guarantee home loans do not have a minimum credit score.  However, most banks have an overlay of a 620 FICO requirement. 

When the mortgage loan underwriter reviews your credit, they’re analyzing your willingness to repay the loan. If your credit history currently shows late payments or even previous bankruptcy, you may still be able to increase your credit score over time.  It may take some effort but don’t get discouraged.  Your first step is to find out what your credit rating currently is.

Most late payments should usually be at least one year in the past, and your current history must show that you have met your credit obligations on-time and diligently for at least 12 months. If you have filed for previous bankruptcy, the discharge date will usually need to be at least two years prior to applying for the loan. You must show that you’ve re-established credit and been diligent with debt payments after your bankruptcy.

Typically, if you currently own a home, you would not be eligible to finance a new home with the USDA home loan.  There are exceptions to this rule such as; a borrower relocating from a different state as a result of a job transfer.  If you currently own a home, you should contact a mortgage professional to find out if your specific situation will allow you to purchase another home. 

Income Eligibility

The USDA home loan guarantee program is designed to help low to moderate income families. There are income restrictions depending on the area you wish to purchase a home. Your loan underwriter will look at your gross income, income from any co-applicants, as well as any other adults who plan to live in the household. If your income exceeds the maximum limit, you may still receive certain adjustments to your gross income that will help you qualify.

In order to give a loan underwriter a clear picture of your income, you will need to submit copies of at least two years of W-2 or 1099 tax filings. If you are self-employed, two years of full tax returns may be necessary to determine a good average income. If you currently work for an employer, you should provide copies of at least one months of pay stubs. You may also click here for a checklist of items you may need for the processing of your home loan.

There are specific debt-to-income tolerances allowed with manually underwritten loan files.  USDA also uses an automated underwriting engine to make a final decision, which may allow those tolerances to be exceeded.  It’s important to have your scenario approved through the correct automated underwriting engine and you should contact a mortgage professional to proceed with this process.

SOME Eligible Areas in Arizona:USDA Home Loan Map for Arizona

Metro Areas:

  • Buckeye, AZ
  • Anthem, AZ
  • Queen Creek, AZ
  • Casa Grande, AZ
  • Sierra Vista, AZ
  • Tucson, AZ
  • Yuma City, AZ

County Areas:

  • Cochise County, AZ
  • Pima County, AZ
  • Pinal County, AZ
  • Santa Cruz County, AZ
  • Yuma, County, AZ

You can click here to determine if the property your thinking of purchasing can be financed with this program.

* Because of the complexity with financing homes with swimming pools under the USDA home loan guidelines, we strongly recommend that you avoid submitting offers on homes with swimming pools.  USDA has historically declined financing almost 100% of these homes.

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1548 days ago 3 Comments Short URL

Author: David Krushinsky

My name is David Krushinsky and I am a Phoenix mortgage specialist that is truly passionate about my profession and the result is that nearly 100% of my business is by referral from satisfied clients, trusted financial advisors and the most experienced REALTOR®'s in the Phoenix area. Questions? Call 602.456.2195 or Visit My Website

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3 Comments

  1. [...] Read more here: Is 100% Financing Still Available For Purchasing a Home in Arizona … [...]

  2. Paul Carson says:

    Great post Dave! I recently blogged about the same topic hoping to spread the word about this terrific loan program for those in more rural areas. Many people are surprised at how non rural many of the qualifying properties are! How can you beat no monthly mortgage insurance!

  3. Justin says:

    Nice work on the video! Informative, well done and one of the more popular items that people are searching for information on.

    Keep on rockin’.

    Justin

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