USDA Mortgage Loan

Rural property owners in the United States may find themselves eligible for a USDA home loan. This is part of the USDA loan program. A USDA home loan differs from a conventional mortgage in a few key areas.

First of all, a USDA loan will not require any down payment to be made. That means that it is possible to finance the entire 100 percent of the value of the property.  Secondly, closing costs can be rolled into the loan.  However, there are income limits depending upon the county in which the home is located. There is a maximum income requirement, so that wealthy homebuyers cannot use the program. For those who are close to the limit, it is worth noting that certain expenses, such as childcare, can be accounted for.

In order to be eligible to utilize the USDA home loan program, the property being purchased has to be in an area that is designated as rural by the USDA. In addition, the person buying the home must occupy it. In other words, the home must be owner-occupied, as opposed to being an investment property.

In terms of the income requirements, applicants must have an income that does not exceed 115 percent of the median income in the area. In addition, the family cannot have adequate housing before making the purchase and must be able to demonstrate that it can afford the mortgage payments and any related fees. The credit history of the applicants does matter, so those with bad credit may have trouble getting a USDA loan.

All of the loans in the USDA home loan program will be structured to be repaid over the course of 30 years. The lender will determine the interest rate and whether or not the loan can be feasibly repaid.

The goal of the program is to encourage people to live in rural areas, which is certainly something that is beneficial to the United States Department of Agriculture.

USDA loans make a lot of sense for those who want to buy a home, but cannot afford to do so if they are required to make a normal down payment. Obviously, it is beneficial if they are already looking at homes in rural areas. However, as long as they are willing to move to one, they will be able to qualify.

Due to some of the requirements, USDA loans are not ideal for everyone. They typically work best for those who are flexible about where they live, or those who are already in rural areas.