What is a USDA home loan and would it be beneficial to me?
USDA Loans are meant to increase purchases in rural areas by offering 101% financing to qualified homebuyers. Home buyers who buy a home in a qualified USDA Loan area and who meet USDA income eligibility requirements can take advantage of the USDA’s low mortgage rates and a program which requires no down-payment whatsoever. USDA loans are 30 year mortgages and are structured just like conventional loans, the major difference being that the USDA will assess a 1% mortgage insurance fee to all their loans and this cost may be added to the loan size at the time of closing.
In order to qualify for a USDA loan, home buyers must meet two main requirements:
1) The buyer must buy a home in a USDA-eligible area.
2) The household income may not exceed 115% of the area’s median income.
There are other USDA Home Loan qualifying criteria, too, including :
The subject property must be a primary residence, the buyer must be at least two years seasoned from a bankruptcy discharge, the buyer must have decent credit, the buyer must meet a qualifying ratio of 29 percent for housing costs; and 41 percent for total debt and the buyer may not own another home within commuting distance of the subject property.
It’s important to note here that these guidelines are not steadfast — specifically, with respect to credit scoring and debt-to-income ratios. There is no minimum credit score requirement with USDA Loan programs, nor is there a minimum trade-line requirement. Buyers are evaluated on the overall strength of their loan application. This is also why the 29/41 debt ratios can be waived. A buyer who can show a strong credit score, for example, or deep reserves can generally get approved with debt ratios in excess of the recommended limits.
Get help with your rural home loan and determine your personal USDA Home Loan eligibility as not all counties are eligible for USDA loans. Our experienced mortgage broker, Gary Cutler, knows the ins-and-outs of USDA loans, as well as all other types of loans, so call Global Unity Mortgage today to verify eligibility at (860)872-9479 or contact him via email at email@example.com.
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