Things You Should Know About USDA Loans
USDA loans are zero down payment mortgages for rural homebuyers. They are specifically for borrowers who need to think financially and cannot get a traditional mortgage.
Therefore, for low and moderate-income households, who currently live or are considering moving to a rural area and want to buy a home, USDA loans in Pittsburgh may offer a good opportunity for you.
3 Major USDA Home Loan Programs
Mainly, there are three USDA home loan programs:
* Direct Loans
The USDA issues direct loans. These mortgages are for low and very low-income applicants. With subsidies, interest rates can be relatively low to even 1%.
* Loan Guarantees
The USDA guarantees a loan issued by a participating lender, similar to an FHA or VA-backed loan, further allowing you to get low mortgage interest rates, even without a down payment.
* Home Improvement Grants And Loans
These loans permit homeowners to repair and upgrade their homes. Packages can also combine both the loan and a grant which can provide a significant amount of assistance.
Benefits Of USDA Loan
The USDA loans enjoy multiple benefits over other loan types. Its stringent requirements and concrete government backing allow lenders to offer highly competitive loans and terms that can’t be matched with different types of loans.
* Low Credit Score Requirements
Applicants with a credit score of 640 or higher tend to qualify for automatic approval via USDA automated underwriting system.
* Little To No Downpayment
Guaranteed USDA loans do not require the initial down payment. While this may result in increased monthly payments for the longer term, it lowers the initial bar of homeownership.
* Low And Fixed Interest Rates
USDA loans are readily available with low and fixed interest rates that vary by each lender.
Qualifying For A USDA Loan
In order to qualify for a USDA loan, you are required to meet other requirements, which are for both applicants and the property itself.
For Borrowers
The applicant must be a US citizen, a noncitizen national, or a Qualified Alien. Additionally, the applicant must be creditworthy and have the ability to pay the mortgage. An applicant is considered unsuitable if it exceeds 115 percent of the home location’s median household income.
For Property
Properties purchased via USDA loans must be used as a primary residence. In addition, properties purchased via USDA loans must have direct access to a street, road, or a driveway and should have functional utilities, including wastewater disposal.
Note
To apply for a USDA-backed loan, you first need to talk to a participating lender. Though it offers low-interest rates and no down payments, you’ll be surprised to know just how accessible a USDA loan is, as long as you fall under a set of requirements.
Author’s Bio – The author is a blogger and this article deals in everything you need to know about USDA loans.
