The U.S. Dept. of Agriculture (USDA) has developed a home loan guarantee program that can help you find a lender and obtain a home loan mortgage. The USDA Rural Development program offers partnered lenders a guarantee on loans provided to qualified borrowers for housing in rural communities. With the help of this program, you can be living in a home with little or no money down!
A USDA Rural Development home loan offers qualified borrowers a chance to obtain a home loan with easier qualifications and financing options than other conventional loans. Some benefits are no down payment required, financing up to 100% of the appraised home value, flexible credit guidelines and no maximum purchase limit.
USDA loans are similar to most conventional loans. Borrowers repay the loan on the same schedule as a conventional loan, there are no repayment penalties, and closing costs are normal. Still there are quite a few benefits to purchasing a USDA loan.
No down payment is required.
The Rural Housing Loan program was created to assist low to moderate income families in securing low interest loans to purchase homes. Income requirements vary from state to state, and even from county to county. Check with your local realtor or check online here, to see if your family qualifies for a USDA loan.
In addition to meeting income requirements, applicants must also purchase a home within a rural community. However, U. S. Department of Agriculture defines the term “rural” loosely. Many small towns, suburbs and exurbs meet the rural requirement. A USDA loan does not cover any income producing properties, so farms are not eligible for the loan.
The Rural Housing Loan program is partially funded by borrowers. Homeowner mortgage insurance premiums are used to keep the program running. USDA mortgage insurance is included in the loan balance and are generally lower than FHA loans. VA loans, and conventional loan mortgages.
USDA loans have a reservation fee, which adds 3.5% of the purchase price onto your loan. This can be a pitfall to some borrowers who opt for the 100% financing option, because they are actually receiving 10.3.5% financing. This means that borrowers will end up paying an additional 3.5% more than the cost of the home in the end. In generally it is a good rule to have some funds saved to make even a small down payment on a home before purchase.
Navigating mortgage and loan rates is complicated! Why not let our team do the hard work for you? Equity Source Mortgage is a trusted mortgage broker in Minnesota. We believe that people deserve a home to call their own. At Equity Source Mortgage, our number one goal is to match you with the best loan for you. Contact us or call us at 763-657-2000 to begin exploring your home ownership journey – YOUR Dream Is Calling!