USDA Home loans are a government backed loan program like FHA and VA loans. Originally, the program was designed for people who wanted to purchase properties in rural areas, and had limited financial options. The mission of the USDA was, and still is, to promote economic growth in rural areas. Today, as more and more people are embracing the idea of leaving the city for more space, USDA home loans have given many families who otherwise wouldn’t qualify for a mortgage, an opportunity to do just that.
The team at EPM wants to share what you need to know about USDA Home Loans so you can learn whether this type of loan might be the right option for you. Can you hear the country life calling?
What are the financial benefits of a USDA loan?
People love that USDA loans offer a lot to first time homebuyers who qualify. The major benefits are:
- No down payment required
- Low interest rates
- Affordable mortgage insurance
- Designed for lower-income homebuyers
- Flexible credit requirements
Sounds great, right? Now let’s make sure you’re eligible.
Who qualifies for a USDA loan?
The USDA Website offers eligibility information that can help you identify if your income or an existing property would be eligible for USDA loan assistance. BUT FIRST, we want to break down a few things to expect before you start your search:
USDA loans were created for families who otherwise wouldn’t qualify for a mortgage. To qualify, buyers must show that they can afford the mortgage, but also fall in the low to moderate income bracket. So in general, if you can bring our credit score up as high as possible, and your annual household income doesn’t exceed the income limit of the area, you should expect to qualify.
The USDA qualifies areas that have a population of less than 20,000, and/or are outside of a metro area and have a lack of mortgage credit for low income buyers. Eligibility can change every few years, so it’s important to know what may be eligible today, could be ineligible down the road when you’re ready to buy
Other Eligibility Requirements:
USDA Loans are created so that borrowers with a lack of credit history or down payment can qualify for financing. You’ve met the above requirements and you’re ready to talk to a lender. Just a few more requirements to make sure you meet USDA Home Loan Eligibility. Buyers must:
- Be a U.S. citizen or have legal permanent residency
- Be willing to buy a home that costs 29% or less of their monthly income
- Have dependable income over a period of at least 24 months
- Have a credit score of at least 640
- Occupy the residence; this is not for rental or vacation property
You can always count on the team at EPM to have you back when it comes to finding the right loan for you. If you have read this far and are still on board to see if this could be the loan option you’ve been looking for, contact a lender at EPM today to help answer any questions and walk you through the next steps.