Anyone in the market for a new home has heard many terms they might not fully understand. One such term is USDA. It might sound like the approval your beef has prior to showing up at your favored supermarket, but it’s more than that. The USDA mortgages available to homebuyers are among the most popular in the nation. The U.S. Department of Agriculture wants to help those in the market for a new home afford precisely what they want. Whether you’ve heard of a USDA loan or not, you want to learn as much as about it as possible before you finalize your mortgage application.
What is A USDA Loan?
The USDA loan for a mortgage is simpler than it appears at first glance. The purpose of a USDA loan is to work on improving the rural areas of America. This kind of loan is given to buyers with the backing of the federal government, and it means that banks are more willing to work with those who have no down payment or a very small down payment. While many banks aren’t willing to work with anyone who doesn’t have the full 20% or more of the home’s value to put down, they are willing to do that when the government backs the loan with their own guarantee.
Who Can Apply for A USDA Loan?
Not just anyone qualifies for a USDA loan, but those who do can have the home of their dreams when they never believed it was possible. The requirements are stringent, and there is no getting around them.
- You must be a legal citizen of the United States
- You must purchase a home that includes your insurance, taxes, interest, and principal for a monthly payment that’s less than 29% of the income you bring home every month
- You must have the same job as a source of income for at least 24 months
- You may not have any collection accounts on your credit in the past 12 months
- You must have acceptable credit
What is nice about a USDA loan is that it’s available to people with low credit. Anyone with a credit score of more than 620 is given a higher standard of processing, making it easier and faster for them to receive loan approval. Even buyers with a credit score lower than 580 can be approved for a loan provided they work closely with their lender to meet specific requirements.
USDA loans are typically given to those who have the greatest need, such as people who haven’t a home with sanitary conditions, safe conditions, and they are unable to gain access to a loan through more traditional methods. Buyers who qualify for a USDA loan also have income that falls well below the limit of low income in their particular area.
USDA loans are also only available for homes found in rural areas. This can be anywhere outside of city limits in any part of the country. The home must be safe and sanitary, and it must be well within the affordability of each individual applying for this mortgage.
If you are looking for home and qualify for a USDA loan, you should consider it. It’s often the only option buyers have when looking for a home they can call their own. It’s a government-backed program that helps banks want to work with you for a loan. This kind of loan is affordable, it’s reliable, and it’s helping millions of families find the kind of housing they need for their families.