What is an USDA mortgage loan?
USDA Loans or US Department of Agriculture Loans are offered on the purchase of properties located in rural areas of the country. USDA Loans, which are also known as “USDA Home Loans”, “Rural Housing Loans”, or “Section 502 Loans”, are offered to eligible rural and suburban home buyers who are looking for a no-money down, 100 percent mortgage financing for their primary homes.
USDA loans are insured by the US Department of Agriculture and are best-known for their ‘no-money down’ financing feature. These are designed to help low to moderate income households purchase a home in a USDA-specified rural area. The USDA Home Loan Program offers 100 percent financing for all approved submittals, and besides VA Loans, it is the only loan program in the US that requires no down payment.
When it comes to finding a loan type for your home purchase, you may feel a little lost among the numbers of loan types and providers that are out there.
This list is to help you figure out if you really need and want a USDA mortgage loan.
Here's a quick rundown of our list:
- Reason 1 - You Have Lower Income.
- Reason 2 - You Live In An Area Considered Rural.
- Reason 3 - You Need A Home.
- Reason 4 - You Can’t Afford A Down Payment.
- Reason 5 - You Have Quite A Bit of Debt.
If you find that after reading this that you really want this kind of loan, then I would suggest that you contact me.
I will help you get through the process and find a loan that fits you the best.
However, first, you have to see why you might be the best fit for this kind of loan type.
Reason 1 - You Have Lower Income.
If you are at or under 115 percent of the median income for the area that you are looking at, then you will be likely to qualify for this loan.
With that income, you might find it difficult to find other homes that you can really purchase a home in this market.
This loan is designed for people that have little income to ensure that they are able to get the housing that they need to have a decent life.
If you are even lower than that, then you will find that the loan program will be even more likely to look at your case.
Although you still need to have income (which they will need to verify for the last couple of years), you don’t have to have a ton of income and savings in order to qualify for this loan type.
Reason 2 - You Live In An Area Considered Rural.
While the definition of rural according to the USDA is rather loose, you will find that it actually fits a lot of areas that you might want to live.
You don’t have to be currently living in a rural area, but the home that you’re considering does need to be in an area that is considered rural.
This might mean some double checking on the area that you’re looking at for homes or the homes that you are considering and a little bit more work on your part.
However, if you want a home with a loan that is easier on you than otherwise, it might be worth the time and energy to do the research.
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Reason 3 - You Need A Home.
A home is an important place.
It allows you to keep a standard of living, a job, and help you raise a family.
Getting a home can be difficult if you are just out college with debt and not so great credit on your side.
The USDA loan is meant to help those that really need a home, but cannot afford everything that comes with getting a mortgage loan.
Even if you’re looking at the home improvement loan type, this is meant to make sure that you have a home.
A home that doesn’t function or isn’t very habitable isn’t really a home.
Whether you’re buying a new home or trying to fix the home that you already have, this loan will be able to help you on the way to improving your life and getting the stable footing that you need for your or your family’s future.
The USDA gives these loans when you are looking at a home that is modest in size and price because they wish for this loan to be for those that really need a home.
This may limit what you will be able to do with your home in the future, but it does mean that you will be able to afford the home that you need today.
Reason 4 - You Can’t Afford A Down Payment.
Whether it’s because you’re not getting paid enough to save up money or because you’re stuck paying off loans every month, not having enough money for a down payment is one of the major problems that people face when they’re looking for a home and a mortgage loan.
The lack of a down payment is a rare thing since the only other government-backed loan type that doesn’t have a down payment is the VA loan.
This means that you don’t have to be in the military in order to get a loan without a down payment.
While you still might see a small fee (2 percent) when you get the loan, this will be much lower than the down payment that you would pay with the FHA loans (3.75 percent).
This takes out of the largest road blocks that people face when they’re looking to get a home.
Reason 5 - You Have Quite A Bit of Debt.
Whether it’s student loan debt or another kind of debt, the debt-to-income ratio is incredibly important when people look at you for a loan.
Conventional lenders will want a low ratio, but the USDA doesn’t mind a higher ratio, especially if you have a decent credit history.
They want to ensure that people are able to get a home and loans are difficult to come by already.
If you have a large amount of debt, then you will find that the USDA loan is one of the best options out there for you.
What do you think?
Leave your comments below – or text/call me at (760) 297-4539.
Your USDA Mortgage Insider,