The USDA Home Loans program has become a staple in the rural community as a means of affordable housing.

USDA Loans offer some the lowest rates of any loan, and you will always have a fixed interest rate. Ensure your future home loan stability with Galaxy Lending Group.

 


 

The Facts About USDA Loans:

What are USDA Loans?

The United States Department of Agriculture (USDA) gives out a variety of loans to help low or moderate income people buy, repair or renovate a home in a rural area. Some of the popular types of loans are: the single family direct homeownership loan, the single family guaranteed homeownership loan, the rural repair and rehabilitation loan or grant and the mutual self-help loan. This guide will help you figure out what these loans are and whether you qualify.

Though the terms and details of these loans differ, all offer very low effective interest rates (some are as low as 1 percent) and don’t require a cash down payment. To qualify, you need to have a decent credit history.

Benefits of USDA Loans

  • No Required Down Payment
    USDA loans are one of the few house loans that are available with no down payment required.
  • 100% Financing
    Homebuyers have the option to finance a house for 100% of the purchasing price.
  • No Funds for Closing
    100% financing goes to the buyers and closing costs can be paid by the seller or included in the loan, provided the house appraises for more than the purchasing price.
  • No Just Farmland
    Properties are regularly close to desirable metropolitan areas. Check to see if your home is in a USDA-eligible area.

Check Your Eligibility for a USDA Loan

These are the requirements for getting a USDA home loan:

  • Credit score ≥ 640
  • 0% down payment options available
  • Debt-to-income ratio is < 46%
  • Income limits may apply based on your household size
  • Property must be in a qualifying area (Check Yours Here)
  • Borrower must not have adequate assets to acquire other traditional conventional financing. The borrower, although, may qualify for an FHA or VA loan.
  • Other underwriting requirements will apply depending on borrower’s situation

Single Family Guaranteed Housing Loan

This loan can help moderate-income households buy a modest home (see above) in a rural area. To qualify, your income can’t exceed 115 percent of the median income for the area; you must be able to afford the mortgage payments, taxes and insurance for the property; and you must have a reasonable credit history. These loans are for 30 years, and the interest rate varies.

For more details about the program, visit the United States Department of Agriculture.

Rural Repair and Rehabilitation Loans and Grants

These loans and grants provide money to low-income people so that they can repair or improve their home to get rid of health or safety hazards or to make the place safer or more sanitary. To get one of these loans, you must make below 50 percent of the area’s median income and be unable to obtain affordable credit elsewhere; to get one of these grants, you must be 62 years or older and be unable to repay one of these loans. You can get up to a $20,000 loan with a 20-year term at 1 percent interest, a $7,500 grant, or the combination of both for up to $27,500.

For more details about the program, visit the United States Department of Agriculture.

Single Family Direct Homeownership Loan

This loan helps low-income households buy, repair or renovate homes in rural areas. The loans are for up to 33 years for those with incomes that are above 60 percent of the average median income for the area, up to 38 years for those below that, and 30 years for those who buy a manufactured home (a mobile home or another home that was made mostly in a factory).

To qualify, your household must have an income below 80 percent of the median income for the area; be without adequate housing; be able to afford the mortgage payments, taxes and insurance for the property (though you can sometimes qualify for subsidies to help you with this part); and be unable to get credit through another lender. Plus, you must buy a home that is “modest” for the area, meaning that its market value, design and size are reasonable for the area.

For more details about the program, visit the United States Department of Agriculture.

Mutual Self-Help Loans

This loan helps low-income families in rural areas who are unable to buy clean, safe homes or build their own homes; these families will do much of the labor to build the homes themselves. To be eligible, families must have an income that is below 80 percent of the area’s median income, be without adequate housing and be unable to get credit elsewhere. The term of the loan is for up to 38 years (could be a shorter term, depending on your income), and effective interest rates can be as low as about 1 percent.

For more details, visit the United States Department of Agriculture.