usda loan

Why choose the USDA Loan?

What is the USDA Loan?

USDA loans are mortgages backed by the U.S. Department of Agriculture as part of its USDA Rural Development Guaranteed Housing Loan program. The USDA loan is available to home buyers with below-average income, offer 100% financing with reduced mortgage insurance premiums, and feature below-market mortgage rates.

 

Who is the Loan For?

  • Someone who meets income-eligibility
  • Agrees to personally occupy the dwelling as their primary residence
  • Is a U.S. citizen, a U.S. non-citizen national or qualified alien, or has the legal capacity to incur the loan obligation
  • Has not been suspended or debarred from participation in federal programs
  • Demonstrates the willingness to meet credit obligations in a timely manner
  • Purchases a property that meets all program criteria
  • Must provide a credit history report; but the flexible guidelines allow potential homeowners with spotty or bad credit to still qualify for a home loan.

 

How may funds be used?

  • New or existing residential property to be used as a permanent residence.  
  • Closing cost and reasonable/customary expenses associated with the purchase may be included in the transaction
  • A site with a new or existing dwelling
  • Repairs and rehabilitation when associated with the purchase of an existing dwelling
  • Refinancing of eligible loans
  • Special design features or permanently installed equipment to accommodate a household member who has a physical disability
  • Reasonable and customary connection fees, assessments or the pro rata installment cost for utilities such as water, sewer, electricity and gas for which the buyer is liable
  • A pro rata share of real estate taxes that is due and payable on the property at the time of loan closing.
  • Funds can be allowed for the establishment of escrow accounts for real estate taxes and/or hazard and flood insurance premiums
  • Essential household equipment such as carpeting, ovens, ranges, refrigerators, washers, dryers, heating and cooling equipment; as long as the equipment is conveyed with the dwelling
  • Purchasing and installing measures to promote energy efficiency (e.g. insulation, double-paned glass and solar panels)
  • Installing fixed broadband service to the household as long as the equipment is conveyed with the dwelling
  • Site preparation costs, including grading, foundation plantings, seeding or sod installation, trees, sidewalks, fences and driveways

 

Why Choose this loan?

  • No Down Payment Required. Borrowers who qualify for a USDA Rural Development home loan have the flexibility to pay nothing out of pocket for a down payment. Additionally, the USDA Loan allows borrowers to use a gift or grant to go toward their mortgage.
  • Competitive 30 Year Fixed Interest Rates. With the guarantee of the U.S. government, a lender can offer competitive interest rates to qualified individuals and families. And, beginning September 2014, the USDA will offer a 15-year fixed rate mortgage. Flexible Credit Guidelines.
  • No Maximum Purchase Price. The USDA Rural Development program has no maximum purchase price limit. However, a lender will still determine the maximum amount of loan each applicant is eligible for based on ability to repay.

 

This program helps lenders work with low and moderate income families living in rural areas to make homeownership a reality. Providing affordable homeownership opportunities promotes prosperity, which in turn creates thriving communities and improves the quality of life in rural areas.

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