Not everyone feels at home when they’re surrounded by pavement and countless rows of similar homes. In fact, a lot of people would rather live out in the country and enjoy looking at endless green pastures. Fortunately, the dream of being surrounded by beautiful pastures could much closer than you think.
What Is A USDA Loan?
In 1991, the United States Department of Agriculture started offering homebuyers rural development loans. The purpose of these loans was to entice homebuyers to move to suburban and rural areas. Today, the goal remains the same. The USDA wishes to promote growth in local economies and rural areas. A USDA loan can make property and land much more affordable. Since their establishment in 1991, USDA loans have been increasing rural home ownership and boosting countless local economies.
Borrowers who meet USDA loan requirements could be eligible for a government-backed loan. The requirements are quite lenient and offer multiple advantages.
Many USDA home loans are aimed at low to middle-income earners. However, there is a broad range of requirements, so check to see if you qualify. You can get a USDA loan quote from Commercial Loan Direct
, and it doesn’t take long to submit your information and see if you qualify.
Direct and guaranteed loans are the two major types of USDA loans. Direct loans, provided directly from the United States Department of Agriculture, are made for low-income homebuyers. These can also be referred to as section 502 loans. A direct loan is ideal for homebuyers who wish to purchase a home within a rural area. Keep in mind that this type of loan is provided directly by the USDA, and not by traditional banks.
The USDA also offers guaranteed loans, but this type is granted by a third-party bank or financial institution. Guaranteed loans are available to individuals of a much broader income range than direct loans, and so are accessible to more families. A guaranteed USDA loan could be available to families who make 115 percent of the local median income. To check your eligibility, visit Commercial Loan Direct today.
Who Needs A USDA Loan?
USDA home loans are great because they offer 100 percent financing, affordable payments and low rates. As more potential homebuyers learn about them, USDA loans are becoming much more popular.
One of the greatest benefits of getting a USDA loan quote from Commercial Loan Direct is the zero down payment, which is perfect for families who don’t have a lot of cash in the bank. USDA loans are for borrowers who meet specific credit and income standards. When compared with many other types of loans, it can be much easier to qualify for a USDA loan.
Unlike other loans, a USDA loan doesn’t require a high credit score or down payment. It’s also important to understand that USDA loans aren’t available everywhere. In fact, they’re only offered in specific geographic areas. If you’re considering this type of loan, the location is the most important factor.
How to Get a USDA Loan
First, it’s best to get a quote from Commercial Loan Direct. You will find out if you qualify and get a free quote. The process for obtaining the loan is quite simple. You’ll need to choose one of two USDA loan options. If you make 115 percent or less of your local median income, then you might be eligible for a guaranteed housing loan. Homebuyers who have very low income can apply and obtain a direct loan, which is also called a section 502 loan.
The direct loan is great for homebuyers who wish to purchase a home within a rural area, and the home must serve as your primary residence. You’ll also need to make sure you meet the income requirements. Current income limits are regularly published by the USDA. If you make less than 50 percent of the median income for your area, then you’re classified as having very low income.
To get a USDA loan, you must maintain decent credit. However, in terms of what your credit score needs to be, there is plenty of flexibility. If you have serious credit problems, then your application might require additional review. A few possible reasons for denial include a bankruptcy or foreclosure within the last 36 months, outstanding collection accounts, tax liens and judgments.
For the best possible chance of qualifying, make sure to keep your debt-to-income ratio low, which is the percentage of your income that must be used to pay bills. Your debt-to-income ratio for housing costs should be 29 percent or lower, and your ratio for total debt should be 41 percent or less. However, lenders can request that an exception be made for a higher ratio. Make sure to get a USDA loan quote from Commercial Loan Direct.
USDA Loan Terms
In the past, USDA loans were viewed as loans for farmers. However, many changes have been implemented, and today, these loans can be obtained for a wide range of situations. The process for applying for a USDA loan is very similar to other loans, but the requirements for the loan are quite different. The terms for a USDA loan are lenient and beneficial.
For example, the terms allow you to get 100 percent financing, which means you don’t have to put any money down. If you were to apply for an FHA loan, you would be forced to provide a down payment of 3.5 percent of the home’s purchase price. The terms also include the USDA guarantee, which means the loan is insured by the USDA.
If a borrower defaults on the loan, then the lender will be reimbursed for the money that is owed. In other words, the USDA removes virtually all of the risk from the hands of mortgage companies and banks. A typical USDA loan operates on a 30-year, fixed-rate loan. This loan program is used because it has been proven to be the safest and most effective.
The loan terms also allow for very low USDA mortgage rates. When a USDA loan is used, mortgage companies and private banks can give borrowers extremely low rates because the loans are backed by the United States Department of Agriculture. You can get a quote through Commercial Loan Direct and start the process today.
USDA Loan Requirements
To get approved for the loan, you must meet certain requirements. You must have the ability to physically occupy the home, and you must be a citizen of the United States. If you’re classified as a non-occupant co-borrower, then you aren’t eligible for the loan.
Borrowers who already own a home must sell it if they want to become eligible for a USDA loan. You must have dependable and adequate income, evidence of which goes back at least 24 months. You must also have qualifying debt-to-income ratios. If you have higher ratios, then you must have strong compensating factors, such as a credit score of 660 or higher.
Your income can be verified with one month’s current paystubs and written VOE, or you can use two years of W2’s and one month’s paystubs. Student loan payments must also be included in the calculations. To get started today, get a USDA loan quote from Commercial Loan Direct.
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Updated for 2016
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