USDA Home Loans

USDA Home Loans

If you want to purchase a home in an area designated rural by the US Department of Agriculture, and you meet the income requirements, you may be eligible to get a mortgage through the USDA Loan Program with no money down. A USDA home loan, also known as a Rural Development Loan, is a government insured mortgage that allows you to purchase a home with no down payment. Those who qualify can obtain 100% financing, with closing costs rolled into the mortgage or paid by the seller. USDA home loans come with competitive interest rates and fixed payments.

There are two different types of USDA loans with different requirements for eligibility: direct loans and guaranteed loans. A direct loan is given directly from the USDA, and was created to help borrowers with low income. To get a direct loan, the household income must be less than 80% of the local median income. A guaranteed loan is made by a private lender such as a bank, and covers a broader income range. The maximum income requirements for a household to receive a guaranteed loan is 115% of the local median

USDA Home Loans

Advantages of USDA Home Loans

Government Issued Mortgage

Government Issued Mortgages

The USDA Loan program was created in 1991 to stimulate the economy in rural areas by promoting homeownership. This program helps borrowers purchase, refinance, remodel and repair homes. There are many homeowner’s who take the opportunity to relocate using USDA rural loans. USDA loans have requirements for the buyer as well as the property sought after. Although this sounds a bit tricky, there are many properties in areas that you wouldn’t expect that will actually qualify for USDA loans.

USDA Home Loan Income Requirements

There are many advantages offered by USDA loans, but it may not be the best choice for every borrower. Income requirements are capped at a certain percentage of the local median income. The home must also be located in a USDA approved rural area. These factors can rule out eligibility for many borrowers. However, if you fit the eligibility requirements for a USDA home loan, you can enjoy low rates and the option for no money down.

Advantages of USDA Home Loans

USDA Home Loan Eligibility

To be eligible for a home loan, you must meet the following criteria:

  • The property must be in a rural area that is approved by the USDA. Some properties may still qualify even if they are located outside rural counties.
  • The borrower must use the home being purchased as their primary residence.
  • Your PITI must not exceed 29% of your monthly income.
  • Monthly debt must not be over 41% of your income.
  • A minimum credit score of 640 is ideal.
  • The loan requirements will vary based on household size and location. You must be able to have enough income pay the loan while still satisfying the income cap requirements.
USDA Home Loan Income Requirements

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