USDA loans are designed to help Americans in the rural and suburban areas make their dream homeownership a reality. These loans have benefits which provide Americans who may not qualify for traditional home financing to own a house. Meeting the requirements for a USDA loan is more manageable than traditional mortgages. Eligibility mainly depends on your income, household size, and location. Compared with other mortgage options, USDA loans have many benefits such as the following:
Zero Down Payment
Make your dream of homeowners possible without worrying about high down payment. The majority of mortgage products require some sort of down payment that can be up to 20%. But, saving for even just a 5% down payment can be challenging for some Americans which delay their home purchase. With a USDA loan, borrowers can own a home without paying a down payment. Their ability to purchase a house right away allows them to take advantage of increasing home values. Learn more at usdaloan.com.
Zero Maximum Loan Amount
While borrowers need to fall within the income limits set by the USDA to qualify for a loan, there isn’t any maximum purchase price. But, the housing should have a modest size. After lenders review the income and existing debt of borrowers, they will loan amounts based on the ability of the borrower to pay.
Credit Requirements are not a Problem
The USDA Rural Housing Loan comes with no credit requirements. Although lenders prefer a credit score of at least 640, those with lower credit scores may still qualify for the loan. In addition, borrowers who have no credit or non-traditional credit are likely to qualify as long as they can support dependable financing standing using evidence such as timely tuition and utility payments. In general, USDA-backed lenders prefer borrowers who show that none of their accounts have been transferred to collection agencies in the last twelve months. Typically, a borrower should have a 24-month history of reliable employment to qualify and have a good income from that employment.
There is Assistance Available with Closing Costs
When buying a house, buyers also have to deal with the closing costs which range between 2% and 5% of the home’s price. With a USDA loan, the home’s seller can pay the closing costs or the buyer can ask their lender to include such costs in their mortgage loan. These costs can be financed up to the home’s appraised value. Also, the closing costs can be paid using gift funds.
If you have decided to get a USDA loan, make sure you do your research. You want to ensure you qualify for this loan before you start shopping for a home. Check the website of the USDA to see their designated areas and the income limits in such locations. Keep in mind also that applying for this loan requires extensive documentation to ensure you acquire a mortgage pre-approval checklist. Before you begin finding homes, know how much you can afford to buy. Such a process will help you in figuring out the rates you can manage.