The Basics of USDA Home Loans
While FHA loans get most of the attention, the USDA has its own loan programs set up as well, and they're designed to provide assistance to those who have a low to moderate income level and who live in rural areas. If you meet those two basic qualifications and are looking for a home, the USDA loan is well worth taking a look at.
USDA loans offer the ability to take out a loan and get the money you need to buy a home, even if you don't meet other requirements set forth by lenders. If you've tried to get loans in the past and haven't been able to, the USDA loan may be the perfect solution.
Types of USDA Loans
There are actually a few different types of loans that are offered by the USDA. Each is backed by the US government, and as such will make it easier for a lender to agree to provide you with a loan. Since you don't need a case down payment, all you need is decent credit history and the desire to own a home in a rural area.
If you're not sure what your options are, you'll have several different choices when considering a USDA loan. These include:
- Guaranteed Housing Loans - Similar to other government-backed loans, these loans are backed by the US government and issued by a lender. They're for 30 years, and borrowers must have a decent credit history and an income no higher than 115% of the median income in their area.
- Direct USDA Loans - These are loans that range from 30 to 38 years and are issued directly to help low-income families buy, repair, or renovate a home in a rural area. Borrowers should have household incomes of 80% or less than the area's median income, be without decent housing, and still be able to afford mortgage payments. Additionally, the home being purchased should be modest compared to other homes and home values in the area.
- Rural Repair And Rehab Loans Or Grants - These loans and grants provide money directly to the homeowner for use in improving or repairing the home. The focus of repairs can't be on luxury, but rather on safety or health issues. Additionally, they're for those who are very low-income. The borrower must make below 50% of the area's median income and also not qualify for affordable credit loans somewhere else.
- Mutual Self Help Loans - These loans are targeted towards those who can't afford safe, clean housing and who have very low income. The loans are given to help the borrower build a home or upgrade an existing home. Borrowers must earn less than 80% of the area's median income, lack decent housing, and have no ability to secure credit elsewhere. Loans are given for up to 38 years, and interest rates can be quite low.
Benefits Of The USDA Loans
The benefits of USDA loans should be obvious to anyone. These include:
- Those with low incomes can still secure a loan
- Lower than normal interest rates are available to those who qualify
- Ability to purchase modest homes in rural areas that may have fewer loan options available
- Can help rural areas improve their own economies by driving up residencies
- Reduces the stress and hassle of finding a loan
In short, these loans offer numerous opportunities to those who need a loan but don't have the higher incomes of some.
Getting Your Loan
Loan programs like the USDA loan program are among the best opportunities for modern home buyers, and especially for those whose lower incomes may sometimes make traditional loans out of reach. Our team of loan experts can help you find the right loan for your needs. Contact us today to find out more.