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USDA Loans

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USDA LOans


USDA loans, also known as Rural Development Guaranteed Housing Loans, are designed to help low to middle income individuals and families in rural areas purchase homes outside of metropolitan cities. These loans are insured by the United States Department of Agriculture. USDA loans are available to purchase or build a primary residence . USDA home loans have household income limits and geographical eligibility restrictions. The USDA loan is typically the best option for a borrower not eligible for a VA loan. Buyers are not required to be first-time homebuyers, but these factors make USDA loans very popular with first-time home buyers if the property is within an eligible area.


 

Our Most Popular Home Loan Options

USDA Features

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Down Payment

USDA mortgage loans are often referred to as the No Money Down Home Loans. This is because a USDA/Rural Development home loans allow you to finance 100% of the home's value. No out-of-pocket expense is required.

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Income

The USDA looks at four different income calculations throughout the loan process in determining a borrower's income eligibility, Annual Household Income , Adjusted Annual Household Income , USDA Qualifying Income , and Repayment Income .

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Credit Score

Credit score requirements for USDA loans are lenient. Applicants without established credit may still be eligible for a USDA loan, but will require another source of credit verification, such as rent or utility payments.

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Interest Rate

USDA loan rates are locked on a 30-Year Fixed Term, which provides mortgage payment stability throughout the entire term. Rates will not go up, which means your monthly payment will not be affected by future rate changes.

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Program ELIGIBILITY

A USDA loan does have household income limits as well as restrictions on eligibility based on the geographic location of the property. Fortunately, the USDA’s definition of rural is generous, and many suburban areas still qualify. Talk to a Mortgage Specialist to find out what areas are USDA eligible and see if you qualify.

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Costs

With USDA/Rural Development loans, up to 100% of the purchase can be financed, often including closing costs. There is no PMI with USDA loans. There is an up-front Guarantee Fee paid to USDA and a annual fee.

In Conclusion

The USDA loan is typically the best option for a borrower not eligible for a VA loan but eligible for a USDA home loan. USDA loans require no down payment and the Guarantee Fee is typically less expensive than mortgage insurance. 100% of the purchase may be financed, so USDA loan require little out-of-pocket cost for the borrower.

For those who may need to improve their credit score to become eligible to qualify for a home loan, while also building up a savings for down payment, check out our RHB Credit Builder Program.

 

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