South Pekin, IL USDA Eligibility

USDA Eligibility Guide

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South Pekin, IL USDA Loan Eligibility Guide

A USDA (United States Department of Agriculture) mortgage, also known as a South Pekin, IL USDA Rural Development Loan, is designed to assist low-to-moderate-income households in purchasing homes in eligible rural and some suburban areas. Here are the general eligibility requirements:

1. Property Eligibility:

    • The home must be located in a USDA-eligible rural or suburban area around South Pekin, IL. The USDA provides an online tool to help potential borrowers determine if a specific property is in an eligible area.
    • The property must be used as the borrower’s primary residence.
    • The home must meet all local codes and program regulations.

2. Applicant/Household Eligibility:

    • U.S. citizenship or permanent residency is required.
    • The borrower must be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet.
    • The applicant must have a stable and dependable income, typically verified by two years of consistent employment. The income must also be sufficient to cover the mortgage payment, including taxes and insurance.
    • The household’s adjusted income must be at or below the applicable low-to-moderate income limit for the area.
    • A reasonable credit history. While a specific credit score is not mandated, a credit score of 640 or higher is typically required for streamlined processing. However, those with lower scores may still be eligible but may undergo a more stringent evaluation.

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    3. Income Limits:

    • Income limits vary by county and household size. You’ll need to check with our South Pekin, IL USDA service center or the USDA’s online tools to see specific limits.

    4. Loan and Debt Ratios:

    • Typically, a 29/41 ratio is followed. This means that 29% or less of your monthly income can go towards your mortgage (Principal, Interest, Taxes, and Insurance) and 41% or less of your monthly income can go towards your total debt (this includes the mortgage and other debt obligations). Exceptions can be made in certain circumstances.

    5. Other Requirements:

    • Borrowers must personally occupy the dwelling as their primary residence.
    • The borrower must be legally able to take on the loan obligation.
    • First-time homebuyers are required to take a homeowner counseling class in some situations.

    6. Loan Terms:

    • The loan term is typically 30 years.
    • No down payment is usually required.
    • The interest rate can be set by the lender but is subject to USDA review.

    7. Guarantee Fee and Annual Fee:

      • The USDA charges an upfront guarantee fee, which can be rolled into the loan amount.
      • There’s also an annual fee, which is a percentage of the remaining principal amount, typically spread out in monthly installments.

    It’s crucial to remember that while these are the general requirements for South Pekin, IL USDA mortgages, eligibility details can change. It’s always a good idea to consult with one of our South Pekin, IL USDA home loan professionals. Get pre-approved with our easy and stress free South Pekin, IL USDA home mortgage today.

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    More About South Pekin, Illinois

    South Pekin is a village in Tazewell County, Illinois, United States. The population was 996 at the 2020 census and is part of the Peoria, Illinois Metropolitan Statistical Area.

    South Pekin was incorporated on April 12, 1917, five miles south of Pekin in an area previously known as “McFadden Flats”. The village is located in Sections 27 and 34 of Cincinnati Township, which was formed in 1850. South Pekin began as a railway station on the Chicago and Northwestern Railroad (C&NW).

    Settlement began in the 1820s in the South Pekin area when white settlers arrived in the future Tazewell County. The railroad constructed its line from Nelson, Illinois to Peoria in 1901. In 1904, C&NW discovered a large coalfield near Staunton in Macoupin County. A few years later, C&NW decided to build a line of access to the coal field and carry freight between Chicago and St. Louis. By March 1912, the right of way had been purchased and construction was started. C&NW needed a water, refueling, and repair station midway on the new line. The first choice for the location of this new station was Green Valley, Illinois, but residents protested and the railroad selected South Pekin as the site of the new station.

    Al Casper was the first permanent resident; he arrived with his family on December 25, 1912. More families arrived and the railroad gave them boxcars to use as homes on a location that was known as McFadden Flats. The village of South Pekin was laid out in Cincinnati Township on July 10, 1913 and incorporated on April 12, 1917.

    The economic possibilities that came with the railroad caused business leaders in Pekin to be very interested to pull the switch yard closer and get the new “railroad people” with steady work and good pay in their town. Ultimately most employees opted to settle close to the yard which was already located in South Pekin. In addition to the numerous blue collar jobs the C&NW operation also brought management positions and erected a three story masonry office building (which was demolished near the beginning of the 21st century). South Pekin was a home terminal for Chicago and Northwestern Railroad crews in the twentieth century. Trains were made up in the middle of the town in a “Kick” Yard. After the trains were put together, crews would get on the train and proceed south to East St. Louis or north to Nelson, where they would be relieved and allowed to sleep for the next tour of operation. The Chicago and Northwestern also maintained a bunkhouse in South Pekin where crews could stop for the night. In the 1970s train crews would go onward through Nelson and proceed to Proviso (a suburb of Chicago) or to Clinton, Iowa. At times there were as many as 20 trains per day either made up at South Pekin or that went through South Pekin.[citation needed]