If you don’t have a big salary for that dream home, you can still consider buying a property using loan options from USDA. USDA loans are targeted for families with moderate to low income, with the intention of improving economy, real estate and quality of living in rural areas. USDA loans are not limited to farmers or anyone who is engaged in agriculture, but your income and size of the household will be considered. It will also be checked if you have a stable income and whether you are eligible for other options in traditional financing.
What are the advantages?
- The biggest advantage of USDA loans is 100% financing. There is no need for any down payment. In cases where a down payment is required, the same much lower than FHA financing or any conventional mortgage.
- Secondly, you can buy a wide range homes through these loans, right from modular ones to manufactured homes. There are no restrictions with size either.
- There are no prepayment penalties with such loans.
- You can choose to get a loan for home improvement, as well. Seniors can get a grant for upgrading and repairing homes.
- While mortgage insurance is required, the costs are much lower.
- Credit score requirements are also lenient. You just a score of 640 or more to get qualified for a USDA guaranteed loan.
What are the disadvantages?
- There are a few geographic restrictions as where you can buy a home. This is not the case with traditional mortgage, where you can buy a home wherever you want.
- Income limits ensure that not everyone can avail such loans.
- You cannot buy duplex homes with USDA loans.
- One must still pay for mortgage insurance
Quick things to know
OnQFinancial explains that USDA loans work wonders for people who do the homework right. You can actually consider to get a loan when none of the other financing choices work. There are calculators that can help in understanding if you qualify for a USDA loan. Things can vary from one county to another, so check the basics. USDA direct loans are great for extreme low income groups, but treat this more like a grant. The easy terms of lending and the choice to finance the whole value are some aspects that make USDA loans a great choice, especially for people who have limited but dependable source of income.
USDA loan information is available online!