Archive for: January, 2024

USDA Mortgage Loans: A Guide for First Time Home Buyers

Jan 24 2024 Published by admin under Uncategorized

The USDA rural housing loan is a 100% financing loan which means that you can finance the full amount of the property value. It requires no down payment either. This makes it perfect for first-time home buyers who don’t have a lot of money saved up.

How to Apply for USDA Mortgage Loans

If you’re planning to apply for this guaranteed housing loan program, you must contact a local mortgage lender. An USDA sponsored program might seem like something targeted to ranchers and farmers. But in reality, your occupation has nothing to do with the matter. Eligibility for the loan is based solely on income and location of the property.

What Makes You Eligible for USDA Rural Housing Loan

Geographic Location

Property location is the most important factor for qualifying for USDA mortgage loans. It has to be located within a USDA eligible area. While the idea of a rural area brings a specific image to mind, 97% of USA is actually eligible. So, there is a high chance that the property you want might be eligible for financing. Go through USDA maps to browse locations or pinpoint a specific address. You can also ask an USDA loan officer whether your property is located within an eligible area.

Income Limit

The total income of your family needs to be 115% of your region’s median income or less. As of 2018, the income limit for 1-4-member families is $82,700 and the income limit for 5+ member families is $109,150. Keep in mind that your entire household income will be counted by the loan lender. This would include for example, a working teenager who is not on the loan.

Credit Standard

To qualify for USDA rural housing loan, your credit score has to be 640 or above. You could also qualify by proving that your credit score was affected by things outside your control. It could be a temporary situation or due to medical emergencies.

Other Requirements
The borrower needs to be an US citizen, an US non-citizen national or a qualified alien.
You would have to submit a 24-month history of dependable employment and show adequate income.
Being a first-time home buyer is not compulsory. But you cannot own any adequate, livable housing close to the property you’re planning to buy.
You must occupy this property as your primary residence.
Why Should You Opt for USDA Rural Housing Loan?

USDA mortgage loans have numerous advantages for first time home owners in rural or suburban areas.

It is a zero-down loan, so you need to make absolutely no down payment.
You can get financing for 100% of the property value.
Mortgage rates are extremely low because of the government backing on the loans. This makes it safer and cheaper for mortgage companies and private banks to lend. The mortgage insurance premium is as low as 0.30%
USDA offers 15 years and 30 years fixed rate loans. Adjustable rate loans are not available
.
Affordable homeownership promotes settlement in less densely populated parts of the USA. This in turn, promotes better quality of life in rural areas and creates prosperous communities. We hope this serves as a comprehensive guide for first time home buyers looking for a primary residence.

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Types of rural housing loans guaranteed by USDA

Jan 24 2024 Published by admin under Uncategorized

. It has not only helped to bring up hospitals, schools, community centres for people but has also given financial help through rural home loans to families who would wish to settle in the rural houses by making new homes or upgrading old ones. Rural housing loan from USDA has helped to give flight to the dreams of a lot of people who always wished to have a beautiful family life in rural America that has visually and aesthetically pleasing stretches of pastures.

USDA offers three types of loan programs for willing candidates. They are: -

Direct loans-

The direct loans issued by USDA are meant for the low and very low-income families and to help them obtain safe and decent housing in rural areas. Section 502 has this direct rural housing loan program where low-income families can apply for direct loans and payment assistance to get access to decent housing. Payment assistance is a subsidy that lowers the mortgage payment for a short period in an attempt to provide financial help to the family.

The applicant for this direct loan must have an income which is equal to or below the low-income limit for the area he or she is applying for.
The applicant must also be without safe and sanitary housing at the present.
The applicant must show previous records of not getting loan from other traditional sources and have the willingness to repay this debt.
He or she must be a citizen of America and have the property being applied for as the primary residence.
The property being financed under the direct loan must also be less than 2,000 square feet and its market value should be less than the applicable loan limit for the area.
Single Family Housing Guaranteed Loan Program
This single-family housing guaranteed loan program is meant for approved lenders who are given the assistance to provide low income families with loans to own or repair safe, decent, modest and sanitary housings. These rural home loans give loan guarantee to the lenders to make them help eligible rural borrowers in building new homes or relocating to a home by repairing it.

Single Family Housing Repair Loans and Grants

These home loans are particularly given to homeowners to renovate or repair their existing homes. The Section 504 has this home repair program that provides monetary assistance to low income families or to elderly and disabled homeowners to help them repair or renovate their homes to maintain health and safety standards because they do not have the capability to provide for it themselves.

The applicant for the loan must be the owner of the house and presently living in it.
He or she must be unable to obtain home repair loan elsewhere from other sources.
The income of the family must be 50% below the median income of the area.
Grants shall be given only to elderly applicants above the age of 62.
Grants will have to be repaid if the repaired property is sold off within a span of 3 years.
The amount of loans and grants can be combined together to get assistance up to $ 27,500 in total. Otherwise, the maximum loan amount is $20,000 and the maximum grant amount is fixed at $7,500.
The primary objective of USDA is to improve the quality of life in rural America by providing financial assistance as much as possible through these rural home loans and home repair loan programs.

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Rural Home Loans: Knowhow

Jan 24 2024 Published by admin under Uncategorized

We have all the information you need to know about rural home loans like the rural development loan.

What is a USDA Rural Development Loan?

The United States Department of Agriculture is offering a 100% financing rural home loan called Rural Development (RD) loan. It reduces the costs for people planning to settle down in rural and suburban areas. This promotes home ownership in the less densely populated areas of USA. Don’t let the name fool you. The word ‘rural’ brings to mind agricultural lands with farmers and cows. But actually 97% of the country representing 109 million people, falls within the eligible area. So, it is highly probable that the house you’re looking for might be eligible for USDA financing.

Advantages of Rural Home Loans

You must be wondering why you should go for a rural development loan.
The biggest advantage is it’s a 100% financing program and you will need to make zero down payment. This means that this rural home loan is perfect for first-time home buyers.
The loan doesn’t require a high credit score so qualifying for this loan is easier than most other loan types. The required credit score for being eligible for the RD loan is as low as 640.
USDA mortgages also have an extremely low mortgage insurance premium of 0.30%. This is the lowest annual MIP of any home loan program except for the VA.
The USDA rural home loan offers two mortgage options- the 15-year and 30-year fixed rate loans. No adjustable rate loans are available. These are extremely safe programs.
This program enables people belonging to low and moderate-income households to afford simple, decent and safe houses.
Eligibility for USDA Rural Home Loans

As we have already mentioned qualifying for the rural development loan is easier than other loan types. This is because it does not require a high credit score or a down payment. Let us look at the exact eligibility criteria for this loan.

The property that you’re looking to buy must be located in a USDA eligible area. You can take a look at USDA maps to pinpoint an address or browse certain areas. If you’re not sure whether the property of your preference is eligible for the loan, you can also ask an USDA loan officer.
Your income needs to be 115% or less than your region’s median income. The income limit as of 2018 is $82,700 for 1-4-member families and $109,150 for families with 5+ members.
You have to be a citizen of the United States, an US non-citizen national or a qualified alien.
You must have an acceptable credit history. You should have no accounts that were converted to collections within the last year. Borrowers who have a credit score of 640 or above get streamlined processing. You may still qualify otherwise by proving that your credit score was affected by temporary circumstances or those outside of your control. A medical emergency would also count.
In order to be eligible, you would typically need a 2-year history of dependable employment.
You need to occupy the property as your primary residence.
The USDA program is getting more and more popular every year and thousands of home buyers are opting for it.

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