Let Midland Mortgage show you how to take advantage of 100% financing and affordable rates through a USDA Rural Housing Loan.
As a low- to middle-income homebuyer, a USDA Rural Housing Loan is a mortgage option well worth considering. At Midland Mortgage, our loan experts can help you to uncover the benefits and qualifications for this home loan and determine whether you qualify.
What Is The USDA Rural Housing Loan?
Backed by the U.S. Department of Agriculture, USDA loans are part of the USDA Rural Development Guaranteed Housing Loan Program. The loans are available to homebuyers in rural or low-income areas who fall in the low to average income range for their specific area. Individuals who thought they would be unable to qualify for traditional loans are often able to receive financing through USDA loans.
Outside of loans available to people who have served in the military, the USDA Rural Housing Loan is the only mortgage option featuring “zero-money down.” If eligible, you will not find a home loan program with more favorable terms than a USDA home loan. While the language includes “rural,” some suburban homebuyers may qualify. In fact, 97% of the U.S. is in a territory that is loan-eligible. Our mortgage counselors at Midland Mortgage can help you to determine if you meet the loan’s qualifications.
How Does The USDA Loan Work?
USDA Rural Housing Loans function by connecting qualifying homebuyers with $0 money down loans with a competitive interest rate. Features of the loan include:
- 100% financing – no down payment required
- No need to pay for private mortgage insurance (PMI)
- Homes outside of traditionally rural areas qualify; often homes in small towns or suburbs will meet the qualifications
- Relaxed eligibility requirements
- Below-market mortgage rates as compared to conventional fixed mortgage loans
It’s essential to keep in mind that the property must also meet specific qualifications. While the home doesn’t necessarily need to be in a rural area, the property must be in an area that is considered low-income and must meet basic requirements, including standards for the home’s physical condition. Our mortgage counselors can help you to determine if a property you are interested in meets the qualifications for a USDA loan.
How Does The USDA Rural Housing Loan Compare To FHA?
If you meet the qualifications for a USDA Rural Housing Loan, it will be the most affordable mortgage option available, even compared to the Federal Housing Administration (FHA) loan. The primary differences between a USDA home loan and an FHA loan include:
- Down payment: While a USDA loan requires no money down, an FHA loan will require a down payment of at least 3.5% and up to 10%, depending on your credit score.
- Credit requirements: For a USDA loan, there’s a 640 credit score minimum, while an FHA loan will accept a credit score as low as 500 with a 10% down payment.
- Mortgage insurance: A USDA loan features low mortgage insurance premiums, while an FHA loan requires a mortgage insurance premium varying from 0.45% to 1.0%, depending on your down payment amount and loan type.
Ultimately, the USDA Rural Housing Loan will prove to be the better option for you if you qualify. However, because the qualifications for a USDA loan are more stringent, you may find an FHA loan is more suited to your needs.
Connect with the experienced mortgage counselors at Midland Mortgage now to find out if you qualify for a USDA Rural Housing Loan. We are here to guide you on the path to homeownership.