A USDA loan is a Rural Housing Loan program that will be insured by the U.S. Department of Agriculture that will give potential home buyers who qualify, a no down payment home financing option in most rural areas. A USDA loan offers 100% financing to most qualified potential home buyers and further allows the closing costs to be paid by the seller or financed into the USDA loan. A USDA loan can offer the lowest interest rates compared to other loans and also the USDA loan can usually offer a fixed interest rate. To be eligible for an USDA loan, there are a few factors that will need be considered in order to qualify for a USDA loan, and those factors are a potential home buyers credit worthiness, USDA loan income restrictions, where the potential home buyer lives or wants to live, and whether or not they wish to own additional property.
There are a quite a few benefits that potential home buyers should look at when they are considering whether or not a USDA loan is right for them and their financial situation. A USDA loan doesn't require the potential home buyer to be a first time home buyer. A USDA loan works for all types of potential home buyers that fall within 115% of the median income for their area to be eligible for these benefits. A USDA loan is also intended for middle income families, who may fall within the income limits that are honored in their state, county, and family size. A USDA loan allows for home loan amounts to be up to one hundred two percent (102%) of the appraised value of the property. A USDA loan sale amount may go over the sales price of the home to further finance the settlements costs and any other related expenses that go with these types of loans. A USDA loan has the extra benefit of a low mortgage insurance premium. A USDA loan charges two percent (2%) of the loan amount as an upfront cost at the time of closing, which in most cases will result in a lower mortgage insurance premium. Most USDA loans will have flexible credit terms. A USDA loan can offer an advantage to some families who would otherwise not qualify for other conventional loan programs. Finally, one last benefit of a USDA loan is that all property types are allowed in this program. A USDA loan can be used in towards home that are located in suburbs, towns, and rural areas. Single family homes, condos, town homes, and manufactured homes can also be included in a USDA Loan. A potential home buyer will want to contact a local real estate specialist in their area or the area to which the potential home buyer is looking to move to see what their choices are in regards to a USDA loan.