United States Department
of Agriculture Loan
What is a USDA Loan?
Definition: A USDA loan is a mortgage offered by the United States Department of Agriculture aimed at helping low-to-moderate income individuals purchase homes in eligible rural and suburban areas.
Eligibility: To qualify, borrowers must meet income eligibility requirements and the property must be located in an approved rural area as defined by the USDA.
Types: The two main types of USDA loans are the Single Family Housing Guaranteed Loan Program and the Single Family Housing Direct Home Loans.
What are the benefits of an
USDA Loan?
No Down Payment: USDA loans often require no down payment, making homeownership accessible for individuals with limited savings.
Low Interest Rates: These loans typically offer competitive fixed interest rates, which can be lower than conventional loan rates.
Flexible Credit Requirements: USDA loans have more lenient credit requirements compared to conventional loans, making them accessible to borrowers with less-than-perfect credit.
Low Mortgage Insurance Costs: USDA loans usually have lower mortgage insurance premiums compared to FHA loans, reducing overall monthly costs.
What to expect with a
FHA Loan?
Property Eligibility: Verify that the property is located in a USDA-approved rural or suburban area. Use the USDA's property eligibility tool to confirm.
Income Limits: Ensure your income falls within the USDA's specified limits for your area. These limits vary by location and household size.
Lender Selection: Work with a lender who is experienced with USDA loans. Not all lenders offer them, so finding one who understands the process is crucial.
Loan Terms: Review the loan terms, including interest rates and any associated fees. Compare offers from multiple USDA-approved lenders to get the best deal.
Additional Costs: Be aware of any additional costs or fees associated with the loan, including the USDA guarantee fee, which is similar to mortgage insurance but typically lower than FHA premiums.
