Buying a home is the big American dream, but that does come for a price that many cannot afford to pay through conventional means. If you don’t have the resources to pay for the down payment of a bank mortgage, USDA home loan might seem like a viable alternative. There are many benefits of USDA home loans, and below are aspects worth knowing.
What is a USDA home loan?
A USDA home loan is offered by the U.S Department of Agriculture, which doesn’t require a down payment and can be used to buy homes in rural and suburban areas of the country. There are a few things to understand here. Firstly, you can use this financing option for homes that are located in regions that have recognized by USDA as rural/suburban. Secondly, USDA home loans are not available for owner-occupied primary residences. In short, you cannot buy a home and give it out on lease to make money. USDA also offers direct loans for extreme low-income groups, besides home improvement loans.
Whether you qualify for a USDA loan or not is determined by many factors, including the location of the property, your income and employment. You can check www.usdaloan.com for more information.
The incredible advantages of a USDA home loan
The foremost advantage of USDA home loans is 100% financing. When you don’t have money for the down payment, this is probably the only choice available, given that VA loans are only available for military personnel. Also, the interest rate on USDA loans is considerably low as compared to conventional loans, and while you still need to pay for mortgage interest, the rate is just 0.35%, which is a big advantage. The idea of a USDA loan is to ensure that more people can achieve the dream of owning a home, and at the same time, it also pushes the population towards regions away from the big cities. What is also a good thing is the relevance of credit score. Yes, your credit score still matters and lenders would prefer someone with a credit score of 640 or more, but there is still a chance that you get the loan. Not to forget, there are no prepayment penalties with such loans.
Other important aspects
If you are thinking of a home away from the city, this is a good way to afford a property that may otherwise seem unviable. Your credit score, income and debt to income ratio will matter. In the ideal case, the total payment towards the mortgage, including taxes and mortgage insurance, shouldn’t more than 29% of the total monthly income. The lender may also want to know the other loans you have, and including the mortgage payment, contribution towards debts shouldn’t exceed 41% of your total income.
Get in a touch with a professional USDA loan specialist to more on eligibility. Find more in the actual process and check if you can get preapproved. Owning your home might be a matter of few papers, so don’t delay in considering a USDA home loan.