Maybe you prefer to surround yourself with pastures instead of pavement. If this is the case, then you should consider applying for a USDA loan. Here are some commonly asked questions about this loan option that may help you achieve the dream of homeownership.
What is a USDA Loan?
USDA Rural Housing Loans feature 100% financing for qualified low- and moderate-income families looking to purchase primary residences. This program is ideal for Borrowers with little or no cash, as no down payment* or borrower contribution is needed for closing.
You can get a USDA loan as a 30-year fixed-rate mortgage and if you already have an existing USDA loan, you can refinance it into a new USDA loan.
Through a USDA loan, applicants can purchase, build, or refinance a home. There are three common USDA home loan programs. Note that eligibility will vary for each program.
Loan guarantees: The loan is guaranteed by the USDA and issued by a participating lender.
Direct loans: These loans are issued by the USDA and are available for low- and very low-income homebuyers. The income requirements will vary depending on the region.
Home improvement loans and grants: These loans or grants allow rural homeowners to repair or upgrade their homes.
How to Qualify for a USDA Loan
Homebuyers will need to meet eligibility requirements to be considered for a USDA loan. Some of these requirements include (not inclusive list):
- U.S. citizenship or legal permanent resident
- Credit score
- Income
USDA Loan Property Requirements
The U.S. Department of Agriculture has basic property requirements for USDA loans that protect homebuyers and lenders. Some of these requirements include (not inclusive list):
- The home is in a qualified eligible rural area/location.
- The home must be used as the primary residence only.
- The home must have access to a street, road, or driveway.
- The home must have utilities, water, and wastewater disposal.
For USDA loans, the following property types can be considered: Single family residence, eligible Condo/PUD/Townhome, manufactured housing. Please note that requirements must be met for the overall transactions type and property eligibility requirements.
To check a property’s eligibility, click here.
Benefits to a USDA Loans
If you are looking for more space and less noise but may not qualify for a traditional mortgage, a USDA loan may be a great option! Of the many advantages, the most cited according to the U.S. Department of Agriculture is the ability for buyers to obtain financing without having to spend years saving for a down payment.
Additional benefits for those seeking a USDA loan may include:
- Competitive interest rates, depending on the market
- Low monthly mortgage insurance
- Flexible credit guidelines
- No down payment is required
- All common and customary closing costs may be financed
- 100% Gifting is acceptable
Next Steps
If you are curious if you qualify for a USDA loan and are ready to move to the countryside, give an Axia Loan Originator a call to discuss your loan home options.
*No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets.
Equal Housing Opportunity. Axia Home Loans is a registered tradename of Axia Financial, LLC. NMLS 27830.