Government Mortgage Programs
Many first time home buyers may be surprised to learn that there are plenty of excellent government programs available that offer a complete range of mortgage services to potential home buyers. Several of these programs will not only get you a great deal on the home of your dreams, but may help you buy that dream home with little to no money down. One of the most popular of these programs is the USDA Rural Home Loan program.
USDA Home Loan Program
The United States Department of Agriculture (USDA) has its very own housing service division known as the Rural Housing Service (RHS) that offers a complete range of mortgage services to potential buyers. The USDA offers direct loans, guaranteed loans, as well as grants for several different purposes. Those who qualify can use these loans for purchasing a home, refinancing a home, renovating/repairing an existing home, or even building a new home from scratch. The main idea behind USDA rural home loans is to offer an incentive for home buyers to purchase a home in a rural area, thus giving rural communities a much needed economic boost.
Perfect for First Time Home Buyers
USDA Loans for first time home buyers are perfect for them because USDA loans are specifically designed to help moderate to low income buyers. Because many first time home buyers don’t have a substantial amount of savings available to them, it can be difficult, or nearly impossible for them to afford the necessary pre-closing costs that comes with purchasing a home, including a 10-20% down payment. However, with USDA home loans, not only is there absolutely no down payment required, but most of the closing costs can be worked into the overall amount of the loan. Thus, giving potential first time home buyers a real opportunity at moving into a beautiful home, with little to no money upfront.
USDA Rural Home Loan Eligibility
First of all, to be eligible for a USDA rural home loan you must be purchasing a home that is within a USDA designated rural area. USDA eligible rural areas can vary from state to state but are generally any area with less than 20,000 residents. There are even many small suburban and village communities that may qualify, even if they’re not located within a traditional “rural area”.
Secondly, you must the meet the program’s specific household income requirements in order to qualify General income limits vary from county to county and are based on the median average income for that area. You must also have a fair credit score of at least 640, have a steady income and can afford to pay monthly mortgage payments, as well as any debt payments you may have previously incurred. Generally, most lenders will want to see that your housing and other debt payments do not exceed more than 29% of your gross monthly income.