The United States Department of Agriculture (USDA) Loan is a loan program available for those in the rural areas, especially for homebuyers whose credit standing is lower than average. First-time home buyers can benefit greatly from buying a house that provides proper sanitary conditions. However, there are various myths encircling the USDA loan program.
7 Useful Facts About the USDA Rural Development Loan
Let's put some light on the real facts to clear-up some of those myths.
1) The loan is not simply for rural areas
There are certain sections of the urban areas that are eligible for the loan program. However, you need to check the suburban areas that are eligible for the loan program on a case-by-case basis.
2) There is zero down payment
To encourage people to buy properties in rural areas, the government has introduced the zero down payment for USDA loans.
3) You need to adhere to the income limits
Your income limit should fall below the income limit described by the USDA. Incomes over a certain limit will not be eligible.
4) Mortgage insurance is cheaper and affordable
The USDA loan program waives the requirement to have a conventional private mortgage insurance (PMI). However, the program charges an additional 0.5% of the remaining loan amount to cover the insurance amount, which makes the mortgage cheaper.
5) USDA loans are not restricted to first-time home buyers
Although the loan is not restricted to first-time home buyers,there are restrictions on owning another property. He cannot own another property until the first USDA mortgage loan has been cleared. However, you can apply for the next loan once the first mortgage is paid.
6) No Cap on the Loan Amount
Currently, there is no cap on the upper limit of the loan amount. However, the buyer has to ensure that his income level falls below the threshold limit to remain eligible.
7) The USDA loan program accepts lower credit scores
The loan program is a conducive option in case your credit score is low since the requirement is lower than traditional loan programs.
Hiring a USDA approved lender will help you qualify for the loan and process the documents at ease. Working with experts on the subject matter will help you understand the requirements of the home loan program and choose a program that best suits your interest. Drew Mortgage Associates, one of the leading USDA mortgage lenders in Boston, provides a wide range of services, including USDA loan consultations.