Residents of rural areas who need assistance purchasing a home may wish to consider applying for a USDA Loan. This loan program administered by the U.S Department of Agriculture is offered to lower or moderate income residents in designated rural areas. Qualifying applicants receive favorable mortgage terms for a thirty-year, fixed rate mortgage.
Why Choose a USDA Loan?
A loan guaranteed by the U.S. Department of Agriculture improves borrowers’ chances of successfully owning their own home. The fixed-rate loan offered to qualifying applicants allows them to purchase a property with little or no down payment. As a borrower, you will need to provide credit and salary information, but overall income cannot exceed the set parameters based on median income for your geographic area. The number of people living in your household is also factored into the income guidelines for this type of loan.
Determine Property Qualifications
The U.S. Department of Agriculture loan program offers an opportunity to purchase a home in a rural area for applicants who might not qualify under conventional mortgage underwriting standards. If you’re considering this type of loan, you must first determine if the house you wish to purchase is located in a classified rural area. You can enter your address in the USDA portal to determine if the property qualifies.
Determine Income Qualifications
Your current income is also a factor in the USDA Loan approval process. The loan is intended to assist low to moderate income prospective homeowners wishing to purchase a home. If you’re unsure about your ability to meet this requirement, you may wish to ask a lender about a prequalification for this loan program. This will give you an idea of how large of a mortgage you would be able to receive under this program.
The Application and Approval Process
USDA single-family home loans are available in two forms: Guaranteed or Direct. Direct loans are available directly through the Department of Agriculture for low-income home buyers. Alternatively, the guaranteed loans are obtained through approved lenders and are backed by the U.S. Department of Agriculture. According to the technical handbook, the guaranteed loans must be issued at a fixed rate and for a 30 year term. Credit scores are used as a basis for approval, with lower credit applicants (between 580 and 639) facing additional requirements to substantiate their ability to repay the loan.
If you believe that you may qualify for a USDA Loan, don’t hesitate to contact a professional mortgage specialist. They can answer your specific questions and help you determine if you meet the standards for this favorable home financing product.