It’s very possible you’re not familiar with a special loan program overseen by the United States Department of Agriculture, or USDA. And that’s a shame because most mortgage companies don’t pay much attention to it and instead suggest other loan programs. However, when properly used, there really isn’t a better home loan program today for those wanting a competitive loan program without needing a down payment. If this sounds like something you’d like more information about, let’s talk. Here are the remarkable benefits of a USDA home loan.
The primary feature of this government-backed home loan does not need to put down a down payment. For those who are saving up money for a down payment and closing costs, this feature alone will make you a homeowner sooner rather than later. The only other zero down loan is the VA home loan. If you’re a veteran or otherwise eligible for the VA program, it too is something you should take a look at. But if you’re not a veteran, active duty personnel or National Guard or Armed Forces Reserves member, the USDA loan can be an answer.
Another benefit of the USDA home loan program comes with the government guarantee. Should a USDA loan ever go into default the lender is compensated for the loss. That’s big because it provides the lender with some additional breathing room when evaluating a loan application. As long as the lender used proper USDA protocol when processing and approving an application, the guarantee applies. This guarantee is funded by two fees, the Guarantee Fee which is 1.00% of the sales price of the home and an annual fee of 0.35%, paid in monthly installments. Essentially, the USDA loan is a government-backed, zero down loan. That’s hard to ignore.
The USDA loan is designed to finance a primary residence in rural and semi-rural areas. Getting competitive financing in rural areas can be a challenge and banks are less likely to commit to a long term mortgage where there are few properties in the area. Not so with the USDA loan as its very design is to assist those who want to live in the country and outside of congested, urban areas. What exactly does a rural area mean? The USDA has a list of approved areas that we have access to. If you’re looking at a rural property all you need to do is call me, provide the property address and I can see if it is indeed in an approved zone. The other requirement for a USDA loan is to limit the household monthly income to approximately 115 percent of the median income for the area.
We know the USDA home loan program inside and out and are proud to promote this special housing option. If this is you or someone you know, someone who wants to buy a rural property while also keeping cash-to-close to an absolute minimum, the USDA home loan is probably just the right answer.