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