USDA Closing Process: How Long Does it Take to Close? (2024)

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How long does a USDA loan take to close?

It generally takes between 30 to 45 days to close on a USDA loan.This USDA closing process begins withthe initial contract and extendsto the final closingday.

Closing Timeline for USDA Loans

Your closing timeline may vary depending on a variety of factors, but understanding the key stages can help you navigate it more efficiently.

The USDA closing process can be divided into six phases:

Phase 1: Purchase Agreement

In this initial phase, the borrower enters into a contract to purchase a home in a designated rural area that meets USDA minimum property requirements. The timeframe for this phase can vary significantly based on location, the housing market or the buyer's resources.

Phase 2: Appraisal

The loan’s underwriter will condition for an appraisal of the property during the underwriting process. Typically, the appraisal takes about a week. However, things like geography, location and the current demand for third-party appraisals in your area can influence the length of your appraisal timeline.

Phase 3: Underwriting

Once the USDA appraisal is complete, the loan proceeds with the underwriting process. Underwriting for USDA loans may sometimes take longer than traditional mortgage loans due to their additional requirements, including the USDA appraisal and approval by the USDA Rural Development Office. You can expect this phase to take anywhere from a few days to a week.

Phase 4: USDA Rural Development Office Approval

One unique aspect of USDA loans is the two-party approval system. Once approved by your USDA lender, the loan must be sent to the state's USDA Rural Development Office (RDO) for final approval. The timeline for RDO approval depends on your specific state, current demand and various aspects of your individual loan. It usually takes a couple days but may turn into a week or more, especially at busier times like after holidays.

Phase 5: Final Approval

The final approval, also known as a "clear to close," is issued once both the lender and the state RDO have approved your loan. The timeframe for USDA final approval can vary but typically only takes a few days.

Phase 6: Closing

Once you receive the clear to close, you can expect to close on your USDA loan within the next few days. This phase involves coordinating with the seller, your USDA lender, real estate agents (if applicable) and other relevant parties to schedule the closing date, time and location.

Speed Up Your USDA Closing Timeline

Due to the more comprehensive underwriting process, USDA loans may sometimes have a longer closing timeline than some traditional mortgages. While this may seem daunting, there are ways to help streamline your USDA closing.

USDA borrowers are more likely to experience a shorter closing timeline if they adhere to the “Four P’s”:

Prompt

Respond promptly to requests from your USDA lender for documentation, appraisal-related inquiries, underwriting results and other essential matters. Quick responses can expedite the lender's part of the process to reduce unnecessary wait times.

Prepared

Minimize delays by gathering all required documentation in advance, preparing for potential obstacles during the appraisal and planning for the possibility of repairs.

Preapproved

Preapproval not only speeds up the USDA loan process but also demonstrates that you are serious about buying a home. After preapproval, avoid making financial changes that could cause delays, such as opening new credit lines, changing jobs, making major purchases or transferring substantial amounts of money between accounts.

Patient

While there are ways to speed up your USDA closing timeline, it's important to remain patient throughout the process. Certain phases may be frustrating at times, but remember that your future home is just on the horizon.