The USDA Loan Process From Beginning to End—and How Long It Will Take

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Getting a mortgage to buy a home is a process, with many hoops and hurdles to jump through and over before reaching the finish line. And this is particularly true for certain specialized loans, like those offered by the United States Department of Agriculture.

USDA loans offer fantastic terms—including 0% down payments and low-interest rates—for homebuyers in rural areas, and while many assume they’re just for farmland, properties on 97% of U.S. land are eligible.

How long does it take to get a USDA home loan?

While the USDA loan process might share certain similarities with other types of loans, there are a few additional steps applicants need to take that can lengthen the time it takes to complete.

All in all, in the best-case circumstances, you can expect the USDA home loan process to last anywhere from 30 to 60 days—or longer if there are hiccups such as missing paperwork. The availability of government funding for these loans might also lengthen the process, in some cases up to three months.

All that said, the generous terms of USDA loans can make them well worth the wait. If you think this type of loan might be right for you, here’s a rundown of the USDA home loan process from beginning to end so you know what to expect.

Step 1: Determine if you are applying for a USDA direct or guaranteed loan

This first step—unique to the USDA loan process—requires applicants to figure out if they qualify for a direct loan or guaranteed loan.

USDA direct loans are for low-income individuals making 50% to 80% of what’s typical for their area. To find out if you qualify, you can take an online self-assessment, which will guide you through a series of questions relating to your location, income, family composition, and so on.

If it looks like you might qualify for a direct loan, then the next step would be to find your local Rural Development office. Direct loans are financed through the USDA itself, so that means applicants must submit all of their paperwork directly through the appropriate Rural Development contact.

Guaranteed loans, on the other hand, are for moderate-income applicants making less than 115% of the area median. These loans are backed by the USDA but financed by approved lenders, which means your application will need to be submitted to a lender rather than the USDA itself.

Not sure which loan you’d qualify for? A Rural Development office can help you figure that out.

Step 2: Find a USDA-approved lender

Homebuyers who qualify for a guaranteed loan will need to then find a USDA-approved lender.

“Not every lender is authorized to provide USDA loans,” says Michael Winkler, co-founder and chief strategist at Sell Home Today.

This is important because there are certain steps of the process that only mortgage lenders trained in this type of loan will know how to do.

While the USDA doesn’t endorse one specific lender over another, it does have a list of guaranteed loan lenders that you can search by state online.

Step 3: Pre-qualify for a USDA loan

Once you know which type of USDA loan to get, you’ll need to get pre-qualified.

Direct loan applicants will find there are a few forms they need to fill out for this step, which can be obtained from their Rural Development agency or office.

“The agency will then pull their credit report to verify the information and check for eligibility,” says Jill Gonzalez, an analyst for WalletHub. “They would also need to provide proof of income.”

When pre-qualifying for a guaranteed loan, this is more of an opportunity to feel out different USDA-approved lenders since the terms it offers and the criteria it requires might vary slightly.

Generally in this stage, you’ll give a broad-strokes picture of your gross total household monthly income, debts, how much you wish to borrow, and the area you’re looking in (which is important for a lender to know when considering income loan limits that applicants must meet).

Step 4: Get pre-approved for a USDA loan

USDA guaranteed loan applicants who pass pre-qualification requirements will then move on to pre-approval—a more detailed process where what you’ve told them so far is verified. In addition to completing a Uniform Residential Loan Application, you’ll need to provide copies of the following:

Tax returns from the past two years W-2s from the past two years 30 days of pay stubs Driver’s license or some other form of government-issued photo ID Two months of recent bank statements

“Once the lender has the necessary information, they will pull a credit report and run all the info through the USDA’s automated underwriting system,” says Tan Tunador, a senior loan officer with Atlantic Coast Mortgage in Loudon County, VA.

After submitting your application, it will typically take three to seven days to find out if you’re approved.

USDA direct loan applicants, on the other hand, will submit their paperwork to their Rural Development office. The time for approval on direct loans might vary depending on the office.

Step 5: Find a USDA-eligible home

Once you’ve got a USDA loan pre-approval letter in hand, it’s time to start home shopping! However, it’s important to remember that only certain types of homes in certain areas qualify for USDA loans.

The best way to discern if a home qualifies is to check the USDA’s property eligibility site, which allows you to enter the exact address of any home you are considering.

Another important thing to keep in mind is that your pre-approval applies only to the area where you’ve indicated you’re home shopping. So if you start casting a wider net and checking out houses one county over with different census numbers, you run the risk that the house might not qualify, or that household income limits differ there, rendering your pre-approval null and void. Make sure to check that new county’s income loan limits before you set your hopes on a house you can’t buy.

Step 6: Sign a purchase agreement and get an appraisal

Once you find a home you love, you will work with your real estate agent and loan officer to make an offer and sign a purchase agreement with the seller. As soon as you have it in hand, your lender will then order an appraisal on the home.

USDA home appraisals are more involved than typical appraisals because evaluations must not only assess the home’s value, but also determine if it meets the USDA’s minimum property standards, which factor in the home’s condition and value.

Make sure your lender is using an appraiser familiar with the USDA guidelines, and expect this step to take at least a week to complete.

Step 7: Wait for the loan to be underwritten and processed

This step might take a little longer than a conventional mortgage because there are two levels of approval for USDA loans. First, the lender provides its approval, then it goes to the local USDA office for that approval.

“In most cases, the lender approval process works like any other loan, so we can have you fully underwritten and approved in as little as two weeks,” says Mason Whitehead, a Dallas-based branch manager for Churchill Mortgage. “After that, we send the file to the local USDA office, which generally takes less than a week for signoff, but there have been times over the past few years that it has taken two weeks or longer.”

Step 8: Close on your new home

Once the lender and the USDA have both signed off on the loan, you’ll receive what is called a “Clear to Close.” From that point, all that’s left to do is schedule a closing date, sign all of the necessary paperwork, and finalize your USDA loan.

USDA loans require borrowers to make the home their primary residence within 60 days of closing the deal. But odds are, after navigating the USDA home loan process, you will be eager to sign on the dotted line and move in immediately!

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