USDA Loans
Your Guide to Rural Home Financing
Rural living is something you may have thought about for a variety of reasons. Perhaps you are looking for a home that gets you away from the bustle of the city – and noisy neighbors – while simultaneously getting you closer to nature. On the other hand, you may have considered something off the beaten path simply to expand your search boundaries for your new home.
What Are USDA Loans And Who Can Get One?
If you need to get a mortgage to purchase a rural – or even not-so-rural home – a low-interest, no-down-payment USDA loan might be an attractive option. If you qualify, you may save money or get in a home faster with this type of mortgage, offered through the U.S. Department of Agriculture’s Rural Development program.
USDA Mortgages
If you’re already looking to buy a home in a rural area, you may have heard of the USDA home loan.
Through its Rural Development program, the USDA supports more remote communities in a variety of ways. The Rural Development loan initiative helps create a sustainable housing market that provides safe, modern homes for those who live in less urban areas.
The advantages of using a USDA loan to buy a home are numerous. Eligible moderate- and low-income home buyers can get a low-interest, no-down-payment-required loan at a favorable interest rate through approved lenders that are familiar with these types of loans.
What Types Of USDA Loans Are Available?
The USDA has two single-family housing programs for home buyers, each geared toward a different group of borrowers. You can find your county’s loan, income and property eligibility requirements by using the USDA’s SFH Guaranteed Lender Lookup Tool.
Single Family Housing Guaranteed Loan Program
This program is designed for low- and moderate-income wage earners. Guaranteed loans are financially advantageous loans that are available to home buyers who can’t secure adequate housing through conventional financing. This USDA loan program is a zero-down home loan made available to those who don’t meet conventional loan requirements.
It’s important to be aware that USDA Guaranteed loans come from the private lender rather than the government. Lenders are willing to loan to borrowers they’d otherwise be reluctant to take a chance on, because the government backs the loan against a possible default.
Single Family Housing Direct Loans
These loans are intended for low- and very low-income households, and the income levels are defined as a percentage of the area’s median income, as described below. The SFH Direct Loan program helps provide payment assistance to qualifying buyers who lack safe and sanitary housing and are looking to become homeowners.
What Determines USDA Eligibility?
To qualify for a USDA loan, you and the home you hope to buy must meet certain USDA loan requirements. Let’s take a look at some of them below.
Income limits are percentages of the Area Median Income (AMI) per household. To find income limits where you live, use Fannie Mae’s Area Median Income Lookup Tool. Here are the income limits for the SFH Direct and SFH Guaranteed loan programs:
|
|
SFH Direct |
SFH Guaranteed |
|---|---|---|
|
Very low income |
Below 50% of AMI |
Not available |
|
Low income |
50% – 80% of AMI |
Not available |
|
Moderate income |
Not available |
Up to 115% of AMI |
To qualify for a USDA loan, eligible home buyers can choose from any of the USDA’s rural-designated areas. Many of these areas are more suburban than rural, so you may have a wider range of choices than you thought possible with a USDA loan.
Get Started On Your USDA Mortgage Today
If you’re a moderate- or low-income earner yearning for wide open spaces or just a place to call your own, a USDA loan can help make your home ownership dreams come true.
If you think that this loan fits your situation, we can help you achieve your home-buying goals with a USDA loan, or one of the other mortgage options that may suited for you.
Ready to see which type of mortgage will be best for your financial situation? Schedule a free consultation now and get the information you need to make the best choice for you.