USDA Loans
Financing for Rural Homebuyers
USDA loans are backed by the U.S. Department of Agriculture and are designed to assist low to moderate-income borrowers in rural areas. They offer low or no down payment options and competitive interest rates, promoting homeownership in rural communities.
USDA Loan Requirements
1.
Credit Score
While USDA does not set a minimum credit score requirement, lenders typically require a credit score of 640 or higher.
2.
Location Eligibility
The property being purchased must be located in a designated rural or suburban area as defined by the USDA.
3.
Income Eligibility
Borrowers must meet income eligibility requirements based on their location, household size, and the median income for the area.
4.
Debt-to-Income Ratio
Borrowers must have a manageable DTI ratio, typically not exceeding 41%.sound.
USDA Loan Benefits
No Down Payment
USDA loans offer 100% financing, which means eligible borrowers can purchase a home without making a down payment.
Low Mortgage Insurance Costs
USDA loans have lower mortgage insurance costs compared to FHA loans and conventional loans with less than 20% down payment. USDA loans charge an upfront guarantee fee and an annual fee, both of which are generally lower than PMI.
Competitive Interest Rates
USDA loans typically offer competitive interest rates that are comparable to or lower than conventional mortgage rates.
