There are 3 main types of home loans that you are getting, today we’re going to be discussing what a USDA home loan is and why it’s been a great option for homebuyers looking outside of the city limits and smaller towns. USDA loans offer a $0 down payment for qualifying buyers who are looking to buy in the eligible USDA areas. Buyers don’t have to be first time home-buyer but in most cases, they can’t own more than one property at a time. If you already have a home loan, then it might be a good idea to consider refinancing your home loan. You might be thinking though why you should refinance your home loan, however, you might find it beneficial to you.
USDA home loans Rates and Fees:
- Offers very competitive interest rates.
- There is a 2% upfront funding fee which is added to the loan.
- Monthly funding fee for USDA is at 50 BPS which is lower compared to FHA and some of the conventional loan options.
- There is an option for financing closing cost to the loan as long as the property is appraised higher than the purchase price. for example, if the purchase price is at $100K and the appraisal value at $102K, buyers can add $2,000 to their loan amount towards eligible closing cost and pre-paid items.
USDA rules and guidelines highlight:
- There is an income limit for each county per household. Clients can see the income limits for USDA Home loans on their website or call lenders for questions.
- The property for USDA home loans has to be in an eligible location.
- USDA properties have to meet the minimum HUD standards.
USA Mortgage and USDA Loans:
- USA Mortgage has been awarded number one lender in Missouri four years in a row with USDA office.
- Offering competitive rates and terms.
- Working with clients who don’t have perfect credit to qualify them for such a loan.
If a USDA loan is something you are interested in or want to learn more about it, Call or Apply online for more information.
Watch out, It is USDA Loan
USDA home loans have been popular in the last few years due to the crash of the subprime market and the credit restrictions. USDA loans are one of the only loans besides VA loans that offer 100% financing and with their low monthly MI, it makes them a great option, but you need to watch out for some of the guidelines that aren’t covered on the cover and can come up as your loan progress with the lender.
The basic rules and guidelines about the income limits, location of the property, condition of the property are all the first steps we use to qualify the borrower, and here are some of the more detailed rules that you need to watch for before making the offer on your dream home.
1. USDA Home loans; are mostly made for borrowers who can’t afford to put any money down or don’t have any options with other loan programs. Now if you have great credit and 20% of your down-payment sitting in your bank, USDA probably will ask you to find an alternative option.
2. If you are buying a house that has over 5 acres of land, the USDA office will look at these case by case, which it does defeat the purpose of the whole loan in rural areas!
3. Although USDA isn’t a first time home buyer program, you only can own one home at any given time with this loan. So, if you do have three investment properties and want to buy your own home with the USDA, you may run into some problems.
4. If you do meet the income eligibilities for USDA but have someone else living in your house with you who also makes money and has income, then you need to add that to the household income and calculate it based on their income, even if they aren’t going to be on the loan or title.
If you need to learn more about the USDA loans, call or email me anytime.