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What are USDA Home Loans?
USDA loans, also known as USDA Rural Development Loans, are a type of mortgage offered by the United States Department of Agriculture (USDA) to promote homeownership in rural and suburban areas. These loans are designed to help low-to-moderate-income individuals or families buy, repair, or renovate homes in eligible rural areas. The USDA loan program has several benefits and features that make it attractive for potential homebuyers who meet the criteria.
What are the Advantages of a USDA Loan?
No Down Payment Requirement: USDA loans are one of the few loan options available that do not require a down payment. Qualified buyers can finance 100% of the home’s purchase price.
Low Interest Rates: Because the USDA backs these loans, they often come with lower interest rates compared to conventional mortgages, making them more affordable over the long term.
Flexible Credit Requirements: USDA loans typically have more flexible credit score requirements, making it easier for individuals with lower credit scores to qualify.
Low Monthly Mortgage Insurance: USDA loans require mortgage insurance, but the rates are generally lower compared to FHA loans or conventional mortgages with low down payments.
Who is Eligible for USDA Loan Approval?
Here are a few eligibility requirements for USDA loan programs:
Location: The home must be located in an eligible rural or suburban area as defined by the USDA. The USDA provides an online map to determine eligibility by address.
Income Limits: There are income limits based on the location and family size. Generally, applicants must have a household income that does not exceed 115% of the median income for the area.
Creditworthiness: Although credit requirements are more flexible, lenders generally look for a credit score of at least 640. However, those with lower scores may still qualify with compensating factors.
Occupancy: The property must be the borrower’s primary residence; USDA loans are not available for investment properties or vacation homes.
Copyright @ 2023 usdaloanlenders.com all rights reserved. usdaloanlenders.com is not affiliated with or endorsed by the U.S. Dept. of Agriculture or any government agency. usdaloanlenders.com. This website is for informational purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. No advertisement or solicitation from usdaloanlenders.com is meant to be a mortgage brokering activity or mortgage lending activity. All brokering or lending activities can only be completed by a licensed loan originator. To see if your loan officer is licensed in your state, please go to https://www.nmlsconsumeraccess.org/ .
