Top USDA Loan Lenders – August 2023

Top USDA Loan Lenders - August 2023

The Best USDA Loan Lenders of 2023: A Comprehensive Guide

At Insider, we understand the importance of making informed decisions when it comes to home-buying. That’s why our team of experts has gathered to answer readers’ questions and provide unbiased product reviews. In this article, we will be focusing on USDA loans, a great option for borrowers who don’t have the money for a down payment.

What are USDA Loans?

USDA loans are mortgage loans that are backed by the United States Department of Agriculture. They are specifically designed for low-to-moderate income borrowers who live in eligible rural and suburban areas. The best part is that USDA loans require no down payment and often come with better interest rates and less stringent credit requirements.

To determine if a home is in an eligible area, borrowers can use the USDA’s property search tool. This tool allows you to check if the property you’re interested in falls within the USDA’s criteria.

The Best USDA Loan Lenders of 2023

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Here are the top USDA loan lenders for 2023, according to our experts:

• Fairway Independent Mortgage USDA Mortgage: Best overall lender
• Flagstar Bank USDA Mortgage: Best for first-time homebuyers
• Freedom USDA Mortgage: Best for a streamline refinance
• Guild USDA Mortgage: Best for non-traditional credit
• Movement USDA Mortgage: Best for low credit scores
• Truist USDA Mortgage: Best online experience
• CMG Financial: Best for a down payment

In the following sections, we will delve deeper into each lender, providing you with valuable insights to help you make an informed decision.

Why You Can Trust Our Expert Panel

To compile this list of the best USDA loan lenders, we consulted a panel of mortgage and financial experts, consisting of:

• Anthony Park, author of “How to Buy Your Perfect First Home”
• Lauryn Williams, certified financial planner and founder of Worth Winning Financial Planning
• Julie Aragon, mortgage broker and founder of Aragon Lending Team
• Molly Grace, mortgage reporter at Personal Finance Insider

These experts have provided their insights and firsthand experience with USDA mortgages. Their collective knowledge and expertise have ensured that our selections are well-informed and unbiased.

Deciding Between a Conventional Mortgage and a USDA Loan

When it comes to choosing between a conventional mortgage and a government-backed mortgage like a USDA loan, Molly Grace from Personal Finance Insider offers some valuable advice. While USDA loans may be less popular than other government-backed loan options, they can be a great choice for borrowers who meet the requirements. If you have a lower income and live in an eligible area, a USDA loan can be a more affordable option for you.

Factors to Consider When Choosing a Mortgage Lender

Choosing the right mortgage lender is crucial to ensure a smooth homebuying process. Anthony Park, our expert on the matter, suggests considering more than just the interest rates. While low rates are tempting, it’s important to also consider the level of service the lender will provide throughout the loan process. Repayments, future refinancing needs, and the lender’s reputation for customer support should all be weighed against the lowest rate. Building a homebuying team that includes a responsive lender is also essential in this competitive market.

Molly Grace echoes this sentiment, emphasizing the importance of a lender’s responsiveness and communication skills. In her personal experience, having a lender that was easily reachable and prompt with updates made a significant difference during the homebuying process.

Financial Readiness for Homeownership

Lauryn Williams, our certified financial planner, offers valuable insights into determining your financial readiness to buy a home. She highlights the importance of having funds left over after purchasing a home, including an emergency fund and a down payment. Additionally, Lauryn advises against taking on too much credit card debt, as it can present risks and create a financially unstable situation.

Julie Aragon, our expert mortgage broker, suggests considering having three to six months of expenses saved after your down payment and closing costs. This indicates a level of financial stability that is desirable when taking on a mortgage.

Methodology for Choosing the Best USDA Lenders

In order to select the best USDA loan lenders for 2023, we considered three main factors:

1. Affordability and credit score: USDA loans are known for their affordability and lower credit score requirements. Lenders on our list accept low credit scores or offer flexibility if other parts of your financial profile are strong.

2. Customer satisfaction: We looked at lenders that appeared in the J.D. Power 2022 Mortgage Origination Satisfaction Study or had positive online customer reviews.

3. Ethics: All of our top picks received an A or A+ rating from the Better Business Bureau, ensuring their trustworthiness.

For a detailed explanation of our methodology, please refer to our full methodology for evaluating mortgage lenders.

A Closer Look at the Top USDA Loan Lenders

Now, let’s explore each top USDA loan lender in more detail:

1. Fairway Independent Mortgage USDA Mortgage: Fairway Independent Mortgage is our top pick for USDA borrowers. They have extensive experience in USDA lending and their high customer satisfaction rankings make them a reliable choice. Some of the key benefits include nationwide availability, alternative credit acceptance, and a user-friendly website.

2. Flagstar Bank USDA Mortgage: Flagstar Bank is an excellent choice for first-time homebuyers, thanks to their easy process and strong customer service. Their live online chat feature ensures quick and effective communication when questions arise.

3. Freedom USDA Mortgage: For borrowers looking to streamline refinance an existing USDA loan, Freedom Mortgage offers a convenient option, with a typical closing time of less than 30 days. They have a strong presence in all 50 states and an excellent BBB rating.

4. Guild USDA Mortgage: Guild Mortgage stands out for its affordability and flexibility in credit scoring. If you have no credit score, Guild Mortgage allows you to use non-traditional credit, such as rent or utility payment history, to qualify for a USDA loan.

5. Movement USDA Mortgage: Movement Mortgage is a solid choice for borrowers with low credit scores (as low as 580) who may not qualify for a USDA loan elsewhere. They are available in all 50 states and have an A+ rating from the BBB.

6. Truist USDA Mortgage: Truist offers a tech-forward experience, with a user-friendly online application and mobile app. They also accept alternative forms of credit and have an A+ rating from the BBB.

7. CMG Financial: CMG Financial provides a unique tool for those considering a down payment, even though USDA loans don’t require one. With CMG’s HomeFundIt platform, you can easily crowdsource your down payment through social media, making homeownership more accessible.

Other USDA Loan Lenders Considered

While these lenders didn’t make our top picks, they are still worth mentioning:

• Caliber Home Loans: Requires an account to contact a representative.
• Carrington Mortgage: Requires a higher credit score closer to 700 for a USDA loan.
• PNC Bank: Requires at least a 3% down payment.
• Veterans United: While they do offer USDA loans, their main focus is on VA loans.

Who Qualifies for a USDA Loan?

To qualify for a USDA loan, lenders evaluate both the property you plan to buy and your financial profile. The property must be located in a rural or suburban area, meeting specific population restrictions. As for borrower eligibility, you must be a US citizen or permanent resident and fall under the maximum income requirement. Proof of stable income and a good credit history are usually required. Your debt-to-income ratio and monthly mortgage payments must also meet specific criteria.

Find Mortgage and Refinance Rates by State

For the latest rates in your state, refer to the links provided at the end of this article.

In conclusion, USDA loans offer a great opportunity for borrowers who lack the funds for a down payment. These loans come with attractive interest rates and flexible credit requirements, making homeownership more attainable. By considering the advice of our expert panel and exploring the top USDA loan lenders for 2023, you can make an informed decision and embark on your home-buying journey with confidence.

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