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United States Department of Agriculture Loans

Harvesting Opportunities in Rural Areas

Who Is This For?

Homebuyers in Rural or Suburban Areas: This loan is ideal for individuals or families who want to buy a home outside of urban centers. It supports those who wish to enjoy a quieter lifestyle or need a larger space without the high costs often found in cities.

Key Features to Consider

No Down Payment:

You can finance up to 100% of the home’s price, meaning you won’t have to save thousands for a down payment. This is especially helpful for first-time buyers who may find saving for a down payment challenging.

Low Interest Rates:

USDA loans often come with lower interest rates compared to conventional loans. This can result in lower monthly payments and significant savings over the life of the loan.

Affordable Mortgage Insurance:

While you do need mortgage insurance (as with most loans with no down payment), USDA loans typically have lower premiums. This makes the overall cost of borrowing more affordable.

Flexible Credit Guidelines:

USDA loans are designed to help more people qualify, so they often have more lenient credit requirements. Even if your credit score isn’t perfect, you might still be eligible for this loan.

Things to Keep in Mind

Geographical Restrictions:

You must purchase a home in a designated rural or suburban area. To find out if a specific location qualifies, you can check the USDA’s eligibility maps.

Income Limits:

There are income limits based on the area and the size of your household. This means your total household income must be below a certain threshold to qualify for the loan. It’s meant to assist moderate-income buyers.

Occupancy Requirement:

The property you buy must be your primary residence. This means you cannot use a USDA loan to buy a vacation home or investment property.

If you have further questions or want personalized assistance, reaching out to a home loan advisor can help clarify your options!

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Frequently Asked Questions

1. Can I do a cash-out refinance with the USDA program?

No, the USDA Rural Development loan program does not permit cash-out refinancing. USDA loans are exclusively for purchasing homes or for rate-and-term refinances (to adjust the loan terms or interest rate).

2. Do USDA loans take longer to close?

Yes, USDA loans may take two to three weeks longer to close than other types of mortgages. This is because each loan file must be sent to the Department of Agriculture for approval before it can proceed to underwriting.

3. Can I receive a gift or have the seller pay for my closing costs with a USDA loan?

Yes, the USDA Rural Development loan program allows you to receive gifts from both family and non-family members, as well as seller concessions to cover closing costs. If you’re using gifted funds, be sure to inform your loan officer early, as additional documentation and verification will be required.

4. What are the benefits of a USDA loan?

USDA loans offer several benefits, including the potential for low or no down payments and attractive loan terms. These features can help you save money when purchasing your dream home.

30-Year Fixed-Rate Mortgage: The payment on a $200,000 30-year Fixed-Rate Loan at 4.375% and 75.00% loan-to-value (LTV) is $998.58 with 1.875 points due at closing. The Annual Percentage Rate (APR) is 4.635%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Some state and county maximum loan amount restrictions may apply.

15-Year Fixed-Rate Mortgage: The payment on a $200,000 15-year Fixed-Rate Loan at 3.75% and 75.00% loan-to-value (LTV) is $1454.45 with 2 points due at closing. The Annual Percentage Rate (APR) is 4.214%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Some state and county maximum loan amount restrictions may apply.