USDA Rural Home Loans
If you currently live in a rural area, or are considering moving to a rural area in the near future, you may be interested in one of the most cost saving mortgage programs in the country, the USDA home loan program. The USDA home loan program is specifically designed help residents is rural areas afford housing by offering a 100% guarantee to lenders for home loans in rural properties. This 100% guarantee offers a real incentive to lenders who may be hesitant about borrowing to isolated rural areas. USDA rural housing loans not only make it more affordable for households to purchase homes in beautiful rural areas all across the county, but also comes with tremendous savings and benefits that no other traditional mortgage program offers.
USDA Rural Home Loan Benefits
Perhaps the most compelling benefit that the USDA home loan program is most famous for, is that it is one of the only home loan programs in the country that requires absolutely no down payment. It is actually one of the only remaining mortgage programs, besides VA home loans for military veterans, that requires a zero down payment. This can be a tremendous benefit to families who can afford monthly mortgage payments, but have nowhere near the 20-30% down payment needed for most traditional mortgage programs.
Also, there is no maximum price for USDA rural housing loans and the amount financed is based on your ability to pay. USDA rural home loans have less stringent credit restrictions than most traditional mortgage programs, and loans can be purchased for a new home or for refinancing an existing mortgage. USDA rural home loans allow you to finance up to 102% of the home’s appraised value with the seller being allowed to make unlimited concessions including paying all the closing costs. USDA Loans come with anywhere between 30-38 year fixed rate mortgage terms, and because every loan is 100% guaranteed, USDA mortgages generally come with lower interest rates.
USDA Rural Housing Eligibility Requirements
To be eligible for a USDA Rural housing loan you must meet certain property and income requirements. To be eligible for a USDA mortgage, the property you’re looking to purchase must be located within a USDA designated rural area. To find a USDA designated rural property in your area please visit the USDA loan home page or contact a USDA home loan representative. Your property must pass all the necessary pre-sale inspections and cannot be used as an investment property.
To qualify for a USDA rural housing loan you must have enough income to afford monthly mortgage payments every month, as well as utilities, taxes, and any other previous debts you may have incurred. However, if your income is too high you may not be able to qualify for the program. Because USDA rural housing loans are specifically meant for middle to low income families, if your annual household income is above 115% of the average median income for that area, you will not be able to qualify.
You must have an above average credit history without any debts currently in collections. While there is no stated minimum credit score needed to attain a USDA home loan, the minimum most lenders will work with is a 640 FICO score. However, some lenders will work with you if your score is below 640 as long as you have steady income, a reliable rent history, and can prove your low credit score is due to circumstances beyond your control.