Tag: real estate investing

Quick answer: Yes, USDA home loans are available in New Jersey, including in parts of Hunterdon County. A USDA Guaranteed Loan lets eligible buyers purchase a home in a USDA-eligible area with no down payment, as long as their household income is at or below the program limit and the home will be their primary residence. Eligibility depends on the specific address, so always check the property first.

I get asked about USDA loans all the time, usually after a buyer finds out a house they love is “USDA eligible.” Here’s how the program works, who qualifies and how to check a home in Hunterdon County.

What is a USDA home loan?

The USDA Single Family Housing Guaranteed Loan Program is run by USDA Rural Development. You don’t borrow from the government. You borrow from an approved private lender, and USDA guarantees 90% of the loan. That guarantee is what lets lenders offer 100% financing to buyers who qualify.

• No down payment. Financing can be up to 100% of the appraised value.
• 30-year fixed rate. Lenders set the rate, so it pays to compare.
• Primary residence only. Not for second homes or investment properties.
• Some closing costs can be financed when the appraisal supports it.

Who qualifies for a USDA loan in NJ?

Three things have to line up: the buyer, the household income and the property.

• Household income can’t exceed 115% of the area median income. In the Middlesex–Somerset–Hunterdon area, recently published limits are about $152,100 for a household of 1–4 people and about $200,800 for 5–8 people. Limits are updated periodically, so confirm current numbers with your lender or USDA’s income tool.
• Credit: USDA doesn’t set a minimum credit score, but lenders look for a history of managing debt, and many lenders have their own minimums.
• Debt ratios: The standard guideline is about 29% of income for housing and 41% for total debt, with some flexibility for strong files.
• Residency: Applicants must be U.S. citizens, U.S. non-citizen nationals or qualified aliens, and must live in the home.

Which areas in Hunterdon County are USDA eligible?

USDA eligibility is based on the property’s location, not the town name. Parts of Hunterdon County are eligible and parts aren’t, and the map changes over time. Nearby, parts of Warren County are also eligible, and all of Sussex County currently qualifies.

The only reliable way to know is to check the exact address on USDA’s property eligibility map. When I list or show a home, I check it for you.

What does a USDA loan cost?

Instead of private mortgage insurance, USDA loans have two guarantee fees:

• Upfront fee: currently 1% of the loan amount, which can usually be rolled into the loan.
• Annual fee: currently 0.35% of the balance, paid monthly as part of your payment.

Those are often lower than mortgage insurance on other low-down-payment loans, which is part of why the program is so popular.

How do you get a USDA loan?

1. Talk to a USDA-approved lender and get pre-approved. Ask specifically about USDA Guaranteed loans.
2. Check the property address on the USDA eligibility map before you fall in love.
3. Make your offer. USDA loans close like other mortgages, with an appraisal and the lender’s underwriting, plus USDA’s review.
4. Close and move in. The home must be your primary residence.

Is a USDA loan right for you?

For a lot of buyers who are renting today and have steady income but haven’t saved a big down payment, a USDA loan can be the difference between renting and owning. One of my listings sold to buyers who used exactly this program, and it’s how they bought their first home.

If you’re curious whether a home you’ve seen is eligible, or want an introduction to a lender who does USDA loans, call or text me at 732-735-0535.

This article is general information, not lending advice. Program rules, fees and income limits change; confirm current details with a USDA-approved lender.