Interest rates are low and the housing market busy, and competition among home buyers is intense. Wish you could cash in on the buying trend but are afraid you can’t afford it? A USDA loan could be your answer. USDA home loans can help home buyers with no down payment achieve their dream of owning a house.
Many homebuyers are unfamiliar with the USDA loan option and don’t know whether they’re eligible for this type of loan. If you’re a buyer who would like to know if you can afford a home, here’s what you need to know about this very useful mortgage product.
Intro to USDA Loans
A USDA home loan is a mortgage that has income restrictions based on location. USDA loans require no money down. These loans come from the USDA loan program, backed by the United States Department of Agriculture. This is the only mainstream zero money down home loan program for non-military members.
Compared to conventional loans, USDA loans can be very accessible to people on a tight budget with little or no money to put down for a down payment. Buyers who get a USDA loan pay a monthly guarantee fee, which is similar to mortgage insurance.
Who Is Eligible?
Eligible parties must demonstrate income restrictions, though income limits vary by location and household size. USDA home loans are only for homebuyers purchasing a primary residence. Buyers must have citizenship or permanent residency, and the payment for the house cannot be more than 29% of the buyer’s monthly income. Homebuyers must have a dependable income and must have had that income for a minimum of 24 months.
Typically, USDA loans are for homes in non-metro areas. These loans are not just for first-time homebuyers.
What’s the Process?
To apply for a USDA loan, homebuyers must provide documentation proving income, job stability, citizenship and more. Documentation that you must produce includes:
- Credit score
- Proof of citizenship or permanent residency
- Two years of pay stubs
- Two years of tax returns
- Utility bills and other proof of monthly payments
Benefits of USDA Loan
There are many reasons to get a USDA loan! If you would like to own a house but find it difficult to save money for a down payment, a USDA loan will enable you to buy a home quickly without a down payment. You can buy a house and save on rent. USDA loans also have competitive interest rates.
USDA loans are also designed to repopulate areas that have lost residents or wish to grow, and allow people to move out of cities and high-density areas.
Buy the Smart Way
Some people have a hard time realistically estimating how much house they can afford. When you’re trying to decide what to buy, be realistic about what you can afford. It’s important to leave enough money per month that you can afford utilities, house repairs and save money for emergencies. Consider all your upkeep costs, homeowners insurance and other monthly bills. Once you buy a house, you’ll need to pay real estate or property taxes. Tax rates vary from one community to another.
Finally, you’ll need money to pay for yard, landscaping costs and maintenance. Furnishings, area rugs, curtains and other window treatments – you’ll have to pay for all of these things when you move into your new house.
Don’t assume a newer home will be low maintenance or trouble-free. Construction quality makes a big difference.
Want to Learn More About USDA Loans? Call Mid-America Mortgage Services, Inc Today
At Mid-America Mortgage, we help home buyers secure a home loan and buy a house – just like they’ve always wanted. To learn whether you’re eligible for a USDA loan, check your income and property eligibility on our website. We’ll be happy to answer your questions and help you find the right mortgage for your needs.