If you are buying or refinancing a home in a rural area and your total household income is less than 115% of the average income for the area, you may be a good candidate for the USDA loan. Unlike other loan programs, though, the underwriting goes through two channels – the lender and the USDA. So how long does the process take?
Start With Your Lender
The first timeframe you need to consider is your lender’s turnaround time. They are the first point of contact when trying to get a USDA loan. You must apply with the lender and go through their process to get the loan approved. Typically, lenders must process your application within three business days of receiving it. They should then respond with an answer and a Loan Estimate within those three business days.
Once you choose the lender, you are subject to their turnaround time as far as underwriting. You do play a role in this process, though. The more documents you provide the lender with upfront, the quicker they can get through the underwriting process. Typically, though, questions pop up and the underwriter will request further documentation. The quicker you respond to the lender, the faster you can get your final approval.
The USDA’s Role in Underwriting
Once the lender completely underwrites your loan, the lender must send a complete package to the USDA. Notice we said ‘complete package.’ If your lender sends an incomplete package, the USDA will not underwrite the loan. Instead, they will send the package back and ask for the missing documents. This means you lose your spot in the queue and have to start the process over again.
Once the lender sends a complete package to the USDA, it usually takes them between one to two weeks to get to your loan and provide the final approval. This, of course, is assuming that everything is in accordance with what the USDA requires.
Closing on Your USDA Loan
The final step is to close on your USDA loan. Once the USDA provides their stamp of approval, you are clear to close. Your lender will schedule the closing with the title company and within a week or two, you should be sitting at the closing table.
Ways You Can Speed Up the Process
As we discussed above, the closer in contact you stay with your lender, the faster the process will go. It’s unusual for a lender to have everything they need from you on the first time around. Usually they have to ask for more documentation or just ask you questions over the phone to clarify certain aspects of your loan application.
Other ways you can speed up the process include:
- Using a USDA approved lender
- Using a lender that has plenty of experience with USDA loans
- Knowing the USDA’s turnaround time when you want to apply for a loan (if it’s too busy, you may want to wait)
The USDA turnaround time isn’t anything to fear. As long as you do your due diligence and stay in contact with the lender, you should be in good shape to close your loan in decent time.