For those considering the purchase of a home in a rural area, there are USDA home loans that can be of great benefit. Such a loan is a part of a federal program that is offered by the Department of Agriculture. It will provide the opportunity for Americans living in rural areas to buy a home. If you qualify for this type of loan, it will be the perfect way for you to get the home of your choice.
There are two requirements that must be met in order to qualify for USDA home loans.
- The home will need to be in a designated area.
- You must have an adjusted annual income that will be within a certain limit. There are two types of income that are considered. One is household income, which will include the combined adjusted gross income of all individuals living in the house, even if they will not be on the mortgage. The other is repayment income, which is income from actual loan applicants.
There are certain facts pertaining to this type of loan that are listed below.
- It is a flexible program that requires no down payment. It will benefit those individuals who live in rural areas and have a low to moderate income with very little savings. The Section 502 Guaranteed Loan is the most common program offered by the USDA. It has a 30-year term and a low fixed rate.
- There is 100% financing available, and if you use a lender approved by the USDA, it will even reduce your closing costs.
- The homes that are eligible for financing include all condos, single family dwellings and planned unit developments, though mobile homes and manufactured homes are not eligible. The home also must be occupied by the owner and cannot be an investment property.
- Many individuals believe that USDA home loans are only for farmers, but this is not the case. A number of suburban areas will also qualify for this type of loan.
- If you have had a bankruptcy in your past, you can still apply for this loan. If it has been at least three years that you have been discharged from a Chapter 7 bankruptcy, you are eligible. If you are in Chapter 13 bankruptcy and have been making all of the proper payments on time for a period of one year, you are eligible.
- You are not required to carry mortgage insurance, which will save you money every month and is another nice feature of this particular type of loan.
First-time home buyers will like the advantages that are provided by a loan offered through the USDA. It will also be worthwhile for those who are moving to a rural area from another part of the country. It is easy to see how individuals living in rural communities benefit with a USDA loan that enables them to get the home of their choice despite a lower income and very little in savings.
If you have used a USDA loan in order to purchase your home, you will be eligible for USDA refinancing as well. There is also a Renovation Loan available through the USDA that will allow homeowners to make renovations to their homes and also include financing in the same loan.
USDA home loans are providing many Americans who live in rural areas and have a lower income the opportunity to obtain the type of home that they would like to have. If you qualify for this particular loan, you will want to apply and take advantage of its many benefits.