How Long Does USDA Loan Approval Take?

How Long Does USDA Loan Approval Take?

Typically the approval process for USDA loans takes between 30 to 60 days from the initial application to final approval. Here’s a breakdown of the key steps and factors that can influence the timeline.

Step 1: Initial application

The first step of applying for a USDA loan is submitting an initial application through a participating lender.  This can often be done online and includes basic personal and financial information like your annual income. Gathering and submitting the required documents can take a few days to a week.

Step 2: Pre-approval

Getting pre-approved for a home loan lets you know the size of the home loan that a lender is willing to give you. The lender reviews your financial information to determine pre-approval. This involves checking your credit score, debt-to-income ratio, and employment history. Pre-approval usually takes 1 to 2 weeks.

Step 3: Property selection and appraisal

Next, you need to find a property in a USDA eligible rural or suburban area. The lender will order an appraisal to determine the property’s value and make sure it meets the USDA’s property standards, which can take 1 to 2 weeks.

Step 4: Loan application and documentation

After your home has been approved, you will complete a full loan application with detailed financial documentation, such as tax returns, pay stubs, and bank statements. The lender verifies your employment and income. This stage typically takes 1 to 2 weeks.

Step 5: Underwriting

After you submit your application, an underwriter will evaluate your application and all of the supporting documents you have shared to ensure you meet the criteria for a USDA loan. This includes a thorough review of your credit history, financial stability, and the property’s condition. Underwriting can take 2 to 4 weeks.

Step 6: Conditional approval

If your application passes underwriting, you receive a conditional approval. This means the lender has approved your loan, but certain conditions must be met, such as additional documentation or property repairs. Addressing these conditions can take 1 to 2 weeks.

Step 7: Final approval

The lender submits your application to the USDA for final approval. The USDA reviews the application and underwriting to ensure everything is in order. This final review can take 1 to 2 weeks.

Step 8: Closing

The final step is the closing process, where you sign the necessary documents agreeing to the loan’s terms and conditions, and the loan is funded. This can take 1 to 2 weeks, depending on the availability of all parties involved.

Factors that influence how long USDA loan approval takes

• Accuracy of your application: If parts of the application are incomplete or inaccurate, this can cause delays as information must be gathered, verified, and resubmitted.
• Lender’s workload: Busy periods may delay the process.
• Property condition: Issues found during the appraisal can require repairs, delaying approval.
• Credit score and financial history: A higher credit score and stable financial history can expedite the process.
• Government processing time: The USDA’s processing time can vary.

5 Tips to expedite the process

1. Gather documentation early: Collect all necessary financial documents before applying.
2. Choose an experienced lender: Work with a lender and loan officer experienced in USDA loans.
3. Stay organized: Keep all necessary documents and communications in order.
4. Respond promptly: Be quick to respond to any requests from your lender or the USDA.
5. Pre-approval first: Get pre-approved before looking for a property to save time.

The USDA loan approval process typically takes 30 to 60 days, with key stages including pre-approval, property appraisal, loan application, underwriting, conditional approval, and final approval. By staying organized and proactive, you can help ensure a smoother and faster process.