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How to Apply for a USDA Home Loan?

Feb 20, 2016 (0) comment

Many people would love to own a home in the countryside and live in the nature’s paradise. The United States Department of Agriculture or USDA provides rural development loans ideal for those wishing to buy homes in the countryside, these can be a fantastic option to obtain a mortgage without needing to make a down payment, and with a competitive rate of interest.

This program is accompanied with certain restrictions related to eligibility and qualification. Let’s review USDA home loans and learn the process and the qualification guidelines.

What is a USDA Home Loan?

The USDA house loan provides attractive lending options to assist low- or moderate-income borrowers. The primary intent of the USDA rural development home loan is to lessen the financial burden on borrowers. With a USDA approved lender, you can have access to up to 100% mortgage financing to purchase a new home. The loan will be at a competitive interest rate with no fees for pre-payment and a period of payback comparable to conventional mortgage programs.

How Do USDA Housing Loans Work?

As mentioned earlier, USDA home loans have different programs available for borrowers. Three of these programs include:

Single Housing Family Loan: This USDA housing loan program connects qualified borrowers with a mortgage loan through a USDA-approved lender. With this program, qualified borrowers can take advantage of a low interest rate mortgage with no down payment required. However, utilizing the no down payment option will require paying for mortgage insurance.

Direct loan: These loans are issued directly by USDA. The thresholds for income can differ based on region. Loaded with subsidies, the interest rate can be as low as 1%.

Grants and loans for home improvement: These loans are approved for those requiring assistance to upgrade or repair their homes. Packages for such programs can be a combination of grants and loans up to $27,500.

Qualifying for USDA Mortgage Loans

The qualifying requirements for a USDA rural housing mortgage are straightforward. However, there is a catch – the requirements exclude urban areas. The intention of USDA rural home loans is to encourage development in rural areas, thus sidelining the urban population.

Along with qualification requirements for borrowers, there are requirements for the property. Keep in mind that these loans are for low- to moderate-income groups who want to live in rural areas. As such, those wishing to live in urban areas or who have incomes over a certain point will not be eligible. Along with income and property requirements, some other eligibility guidelines include:

  • Borrower occupies the property personally as their primary residence.
  • Borrower is a citizen of the United States, or a permanent resident of the United States.
  • Borrower is capable of assuming the obligations of the loan.
  • Borrower should not have been barred or suspended from any federal program.
  • Borrower needs to meet every obligation of credit according to pre-defined timeframes.

The easiest way to obtain a USDA rural home loan is via USDA approved lenders for these programs. Utilizing services from USDA mortgage lenders such as Drew Mortgage Associates will ensure that the paperwork is easily managed. Drew Mortgage Associates have expert loan officers who will assist you in meeting the qualifying requirements and finding eligible properties for you to look at, thus facilitating the entire process.

For further assistance, you can contact Drew Mortgage Associates at our toll-free number 877-949-3739, or visit our website at www.drewmortgage.com

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