If you feel more at peace in an area surrounded by pastures, green sceneries, or a rural area, then buying a home should not be a challenge as you have an option of using a USDA loan. United States Department of Agriculture (USDA) offers a loan program to rural borrowers upon meeting certain income requirements. Managed by Rural Housing Service (RHS), the USDA loan is a program that is part of the Department of Agriculture. It is one of the least-known mortgage assistance programs available to rural residents with a steady but low or modest income, who may be locked out from getting adequate housing finance through conventional loans.
Designed to help in improving the economy and quality of life for rural Americans, the program is easily accessible, offering low-interest rates with no down payments.
How does a USDA loan work?
USDA has three home mortgage programs, namely:
Loan guarantees where USDA guarantees a mortgage which is provided by a local lender, which meets the same criteria as in FHA and VA backed financing. With this type of option, the mortgage borrower gets low-interest rates and no down payment.
Direct loans are a type of mortgage preserved for low and very-low-income applicants where income thresholds are dependent on the region. The interest rates for this option can be as low as 1%.
Home improvement loans and grants are a form of financing where homeowners get a package to repair or upgrade their homes.
Borrower requirements for a USDA rural home loan:
- U.S. citizenship or permanent residency
- Two years or more of consecutive income documented
- A credit score that shows no late payments and can be maintained
- Acceptable debt ratio determined by the lender
- Adjusted annual income cannot exceed 115% of the area median income, depending on family size
- Property located in a qualified rural area
Benefits of a USDA rural home loan:
- 100% financing of the purchase price - no down payment for qualified applicants
- Lower mortgage insurance compared to conventional and FHA loans
- Flexible credit requirements
Those rural residents or families can qualify if they:
- Are without decent and safe homes
- Are unable to secure home financing from traditional sources
- Have an adjusted income that is below the low-income limit depending on the area where they live.
The USDA will give direct loans for 2,000 square feet or less.
We are committed to helping everyone actualize their dream of homeownership, whether living in the urban or rural area, regardless of their credit score or income. We are here to offer a smooth and easy mortgage process.