The U.S. Department of Agriculture mortgage loan is a zero-down program that’s widely available.
Like FHA loans, USDA loans are backed by the federal government and are serviced by private lenders, offering homebuyers in less industrialized communities an opportunity at home ownership.
Much like FHA and conventional lending programs, USDA borrowers will proceed with the application process in a similar way, become approved and then make an offer on a home of their choice.
Seldom discussed, USDA loans output several benefits to help borrowers successfully navigate through the homebuying process.
Many people qualify
While the USDA loan can only be used to purchase within rural areas, you might be surprised by what exactly qualifies as rural.
Per federal guidelines, a community is considered rural if its population is less than 35,000. The government estimates that about 97% percent of potential homebuyers would qualify for the USDA loan program.
If you envision a semi-permanent getaway from the city life in exchange for a slower pace this year, then an USDA loan might be right for you.
Eligible property types vary
Many people pigeonhole the types of property that make up these vibrant communities.
Not all rural homes include big ranches and countless acres of land.
With a USDA loan, home buyers can select from a range of properties including new construction homes, existing single-family homes, modular homes and yes, even condos and townhomes.
When you apply for the loan, lenders will ask about how much money your household earns each year. It must be within a certain range of the area’s median income.
Everyone within your household will be counted even if they are not legally bound to the mortgage. Families can also take advantage of qualified deductions, which will count toward your qualifying income and lending requirements under USDA guidelines.
Foreclosure, bankruptcy not disqualifiers
Applicants with a history of financial turbulence are eligible for the USDA loan. Per the guidelines, you must be three years removed from the time you entered Chapter 7 bankruptcy or foreclosure.
Lenders will also make exceptions on a case-by-case basis. For example: Applicants with a good record of repaying debt over a 12-month period will be considered.
Buying a home with a conventional loan can eat away a lot of your budget and savings account. And if you’re unable to reach 20% for a down payment, private mortgage insurance costs could bubble to the surface.
On a home loan of $400,000, families can easily pay an additional $400 a month for insurance. A USDA loan is not as expensive.
USDA loan holders will pay an upfront 1% fee based on the loan amount. In addition, borrowers will pay a fee that’s about 0.35% of the loan balance annually. If spread out over 12 months, it is considerably more affordable than private mortgage insurance. It’s also possible to build in payments into the loan to cover the fees.
Thanks to USDA loans, more people have access to homeownership despite today’s competitive market. If you have any questions, Premier Mortgage Resources’ loan experts are here to help on a range of lending programs, including the USDA.
Premier Mortgage Resources will work closely with you to develop an attack plan with a mortgage program that meets your financial objectives and gets you to your dream of owning a home.
Please contact us for more information regarding the benefits of a USDA loan, which can fuel your goal of purchasing a home in 2022.
Premier Mortgage Resources, LLC is not affiliated with or an agency of the federal government. All information contained herein is for informational purposes only and, while every effort has been made to ensure accuracy, no guarantee is expressed or implied. Any programs shown do not demonstrate all options or pricing structures. Rates, terms, programs, and underwriting policies are subject to change without notice. The interest on the portion of the credit extension that is greater than the fair market value of the dwelling is not tax-deductible for federal income tax purposes and the consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.