USDA Loans are Available!

About USDA Loans

Welcome to our comprehensive guide on USDA Loans, a fantastic financing option for homebuyers looking to purchase property in rural areas. USDA loans, backed by the U.S. Department of Agriculture, offer competitive interest rates, no down payment requirements, and are designed to make homeownership accessible and affordable. Explore the benefits, eligibility criteria, and application process below.

What is a USDA Loan?

Overview: USDA loans are government-backed mortgages designed to help low-to-moderate income families purchase homes in rural and suburban areas. They are part of the USDA Rural Development Guaranteed Housing Loan Program.

Benefits of USDA Loans

• No Down Payment: One of the few loan programs that allow you to purchase a home with no money down, making it easier to become a homeowner.
• Competitive Interest Rates: USDA loans often have lower interest rates compared to conventional loans, reducing your monthly mortgage payments.
• Low Mortgage Insurance: USDA loans have lower mortgage insurance premiums compared to FHA and conventional loans, saving you money over the life of the loan.
• Flexible Credit Requirements: More lenient credit requirements make USDA loans accessible to borrowers with less-than-perfect credit scores.
• Closing Cost Assistance: The USDA loan program allows for the seller to pay your closing costs, or you can finance them into your loan amount.

Eligibility for USDA Loans

To qualify for a USDA loan, you must meet the following criteria:

• Property Location: The home must be located in a designated rural area as defined by the USDA. You can check property eligibility on the USDA's website.
• Income Limits: Your income must fall within the USDA income limits for your area. These limits vary by location and household size.
• Primary Residence: The property must be your primary residence; USDA loans cannot be used for investment or vacation properties.
• U.S. Citizenship: You must be a U.S. citizen, a U.S. non-citizen national, or a qualified alien.
• Credit Requirements: While there is no minimum credit score requirement, a score of 640 or higher is typically preferred. Lenders may have their own specific credit score requirements.

Types of USDA Loans

Single Family Housing Guaranteed Loan Program

• Description: Provides a 90% loan note guarantee to approved lenders to reduce the risk of extending 100% loans to eligible rural homebuyers.
• Benefits: No down payment required, competitive fixed interest rates, and flexible credit requirements.

Single Family Housing Direct Home Loans

• Description: Also known as the Section 502 Direct Loan Program, this provides payment assistance to increase an applicant's repayment ability.
• Benefits: Low interest rates (as low as 1% with payment assistance), extended loan terms up to 33 years, and no down payment required.