The United States Department of Agriculture, or USDA, has developed a home loan guarantee program, aimed towards fostering rural development and helping qualified borrowers obtain mortgages in rural areas. With its many benefits and easier qualifications, USDA loans are a viable option for many people, including low-income families who may not otherwise be able to afford a home.
Below are some of the benefits:
- No down payment required:Whereas many conventional loan programs require a 20% down payment, many USDA loans allow zero % down payment. With the ability to receive financing up to 100% of the appraised home value, homebuyers don’t have to spend any money out of pocket.
- Competitive 30-year fixed interest rates:With the guarantee of the federal government, a lender can offer the lowest interest rates to qualified individuals and families.
- Flexible credit guidelines: Although a credit report must be pulled, the USDA Rural Development program has less stringent credit guidelines, allowing potential homeowners with poor credit the ability to qualify for a home loan.
- No maximum purchase limit:The USDA Rural Development program has no maximum purchase price limit. However, a lender will still determine the maximum amount of loan each applicant is eligible for based on ability to repay.
It is important to note that USDA loans were not exclusively designed for single-family housing. The loans may be applied to new homes; pre-existing homes; condominiums; townhouses; land and the cost of building a home; commercial property; and farms and equipment.
While there are many benefits of USDA loans, there are also certain criteria you must meet in order to be eligible, including location of the house, household income, credit history, and number of dependents claimed.
The team at i3 Lending is well-versed in USDA guidelines, so speaking with one of our loan officers will help you get on the right track. You may also visit the USDA website to find houses located in eligible rural areas defined by the USDA.