Imagine living in a quiet neighborhood and away from the hustle-bustle of the city. Isn’t that quite appealing? Surprisingly, a lot of potential homebuyers crave this kind of living.
For homebuyers who are thinking of living in rural areas, a beneficial mortgage program always comes to mind: USDA loans. If you’re want to qualify for this program, here’s everything you need to know about it.
USDA Loans: the basics
The USDA loan is probably one of the best home financing programs in the mortgage industry today. Backed by the United States Department of Agriculture, the program helps promote homeownership in America, especially in less-populated areas.
It’s the only other no-down-payment mortgage backed by the government that does not have any military service requirement. Like FHA loans, this program also offers flexible requirements. This makes the program attractive even to first-time homebuyers.
USDA Loans: eligibility
Like any other mortgages, the program has its own set of eligibility requirements. It’s a way for lenders to see if potential borrowers are worthy of a mortgage approval.
The USDA requires a certain income limit to check a borrower’s eligibility. Their income should not go beyond 115 percent of the median income of the property’s area.
Income limits may be increased for a family with five or more members. The best way to check your income eligibility is through their official website.
Credit score requirements for USDA loans do not have definite standards. That means they don’t restrict applicants based on their credit score. Just keep in mind that if a borrower’s credit rating is below 640, lenders may require additional documents to be approved.Let’s talk about the right mortgage for you.
USDA Loans: advantages
The USDA loan is one of the very few mortgage programs that do not require down payment. In fact, it’s the only mortgage that does not have a specific borrower requirement with 100 percent financing.
For borrowers who are struggling to come up with more than enough money for a down payment can take advantage of this program.
Other than that, the program comes with flexible guidelines. Therefore, a lot of interested homebuyers can try to apply for this mortgage even if your credit-worthiness is far from perfect.
Finally, the program does not have strict restrictions when it comes to property type or lot size.
USDA Loans: disadvantages
You’d be surprised that there are a lot of USDA-eligible properties near metropolitan areas. The USDA only allows borrowers to purchase a property within rural areas.
If you think about it, the USDA considers a majority of the country’s locations to be “rural”. If you still prefer living in the city, however, the USDA property eligibility can be a drawback for some homebuyers.
Other than that, the USDA income limit can also be a disadvantage. For income earners that have assets that are beyond 115 percent of the area’s median income, the USDA will consider you ineligible.
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The bottom line
USDA loans are perfect for homebuyers who are looking to buy a property in rural regions in the country through a flexible mortgage option.
Just check USDA’s website for more information about borrower and property eligibility to see if you qualify or you can consult experts about the matter.Click here to become a homeowner.