If you live in a rural area, you might be eligible for a USDA loan. This is one mortgage loan option available to suburban home buyers.
What Are USDA Loans?
The US Department of Agriculture finances mortgage loans to certain eligible individuals living in one of the USDA zones. These loans are available to people with low to medium average incomes. The option features 100% financing, mortgage rates below market rates, and reduced mortgage insurance premiums. The program aims to help rural people who can only rent homes rather than own them.
How Do You Qualify for a USDA Loan?
The income limits that are set for USDA loan qualification depend on the location of the person and the size of their household. In addition, loan funds can only be used for the residence by the owner. Plus, the person must be US citizen. Another requirement is that of a monthly payment that includes principal, insurance, taxes, and interest.
Finally, reasonable credit history is equally important. A score of 620 or above is required, but the USDA does not ban lower scores. If the borrower faced an extenuating circumstance, such as a lay off following redundancies at their place of employment, a medical emergency, or similar events beyond the person’s control, then they can still be eligible for a USDA loan. However, it should be a non-recurring event that should have taken place once, and it shouldn’t have been a result of the applicant’s inability to manage finances.
For applications with a credit score of 680 or above, the chances of getting approved are relatively high. To determine if your property is located in a rural area, you can visit the USDA website, that will guide you with regards to the steps you need to take to find out whether you are eligible for a USDA loan or not.
To request more information on USDA loans, get in touch with an Alliance member by clicking here.