Can You Refinance A USDA Loan?

A USDA loan is guaranteed by the U.S. Department of Agriculture (USDA) and offers numerous advantages to homeowners. Just like any other mortgage, you can refinance a USDA home loan. While your property must be in a “rural” area outlined by the USDA, you may be surprised at what they deem rural, as many suburban areas may qualify. You can either refinance your current USDA home loan, or refinance a different mortgage type to a USDA mortgage.

What Are USDA Refinance Guidelines?

As with any mortgage refinance, you and/or the home need to meet certain criteria. With a USDA mortgage refinance, these loan requirements tend to be more flexible than conventional mortgage refinances. USDA mortgage refinance guidelines include, but may not be limited to:

  • The home must be your primary residence (where you live a majority of the year)
  • A history of making on-time payments
  • Income limits as set by the USDA
  • The home must fall in a USDA-eligible area

How To Qualify For A USDA Refinance Loan?

When you want to utilize a USDA refinance loan, there are a few requirements you will have to meet in order to qualify. To qualify for a USDA refinance loan you will need to:

  • Wait at least 12 months after receiving your initial USDA home loan
  • Be a U.S. citizen or have established permanent residency
  • Have a qualifying debt-to-income ratio (DTI)
  • Meet minimum credit guidelines

Looking for more information about all of your refinance options? Contact us today!

What Are The Benefits of a USDA Refinance Loan?

When there are so many options of refinance loans to choose from, how do you know which one will be best for you? One option is to contact a trusted lender to help run your specific scenario. Another is to keep reading. The benefits of a USDA loan refinance include:

  • Low interest rate. Since the loan is guaranteed, the rate is typically lower because it’s not tied to your credit score or a down payment amount.
  • Low private monthly insurance. As of 2023, the upfront mortgage insurance rate on a USDA loan is just 1%, with an annual fee of only 0.35%, which are the lowest numbers of virtually any mortgage program.
  • 100% financing. The upfront fee can be rolled into the loan, eliminating an out-of-pocket expense at closing.
  • Flexible credit guidelines. If you have lower credit scores or your credit history isn’t perfect, you may still meet the program’s qualifying requirements.

A USDA refinance loan with PrimeLending is a 30-year fixed-rate, offering lower and more affordable monthly payments. If you’re interested in learning more about refinancing with a USDA loan, contact a local PrimeLending loan officer to get started.