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USDA loans are a home mortgage product option for homeowners who may have a difficult time getting approved for a conventional home loan. With more stringent requirements on many home loans, it can be useful to investigate other loan products, some potentially allowing for zero money down.
USDA home loans, or Rural Housing Loans, can make homeownership more accessible for qualified applicants looking for a property in small town America. Find out more about USDA home loans, eligibility requirements and more today. At Car Site you can get any Classified Cars according to your budget and requirements
What Are USDA Loans?
These loan products began being offered in 1949 to help those that were not able to qualify for a conventional home loan. Backed by the USDA Rural Development Guaranteed Housing Loan Program, suburban and rural buyers may be able to purchase their own home with credit scores lower than 640 (FICO).
Depending on the needs of a potential applicant, USDA loans are offered as Loan Guarantees, Direct Loans or Home Improvement Loans and Grants. Both Loan Guarantees and Direct Loans offer low mortgage interest rates.
The lender varies as the first is issued by a private lender and the other is directly offered from the USDA.
A Home Improvement Loan and Grant is provided for those who want to make repairs or upgrade a home. Specific eligibility requirements apply to all three forms of USDA loan.
What Are Some Eligibility Requirements?
97 percent of Americans are eligible for USDA loans. There are certain stipulations. First off, the desired home needs to be located in a rural area or a town having a population less than 20,000.
However, individuals may also qualify when looking for a home in areas with a population lower than 35,000 in specific situations. Individual requirements include:
- Meeting income limits. Income must be less than 115 percent of the median income of the area.
- Making a home a primary residence.
- Being a citizen or having permanent resident status. Valid proof of residency may be needed for those who are qualified aliens or a non-citizen national.
- Falling within their Debt-to-Income Ratio (DTI). The amount of total debt will be divided by pre-tax income to arrive at this ratio or an applicant may show sufficient compensating factors.
- Selection of a single-family home, townhouse or condo.
USDA loans are for those that can’t qualify for other home loan products. If you can put 20 percent down, exceed specified income limits or want to live in areas with larger populations, seek other types of financing.
Can a USDA Loan Benefit You?
There are a number of benefits of USDA loans for a homeowner. These include:
- Purchasing a home with no down payment.
- Enjoying low interest rates.
- Making low mortgage insurance payments.
USDA loans are fixed rate loans, meaning that interest rates will remain the same for the life of a loan. You can also refinance a USDA loan in the future, as long as certain terms are met. Now get Top Savings on used Toyota Aygo cars on CarSite
