Tuesday, October 14, 2014

What is a USDA Loan? Where's the Beef?


The USDA home loan is fast becoming the first choice for many new home buyers, why you say?
Well first it allows 100% financing….. yep that’s 0 down payment to the home buyer. USDA also has a very low mortgage insurance requirement. Unlike the FHA that is falling in popularity due to the increases in mortgage insurance both upfront and monthly. Plus FHA does requires 3.5% down payment.

Ok let’s talk about the USDA Home Loan, of course just by its name you can probably guess that it’s offered by the USDA. USDA started offering 100% home loans back in 1991 to help boost the housing economy and it’s still doing its part today by helping our economy and families with low incomes to purchase a home.

Eligibility is both income and property related. Let’s talk about the property first. The loan itself is called the “Rural Housing Loan” or “Section 502” loan, which may have you thinking your new house has to be a farm or have lots of land. That couldn't be further from the truth. In fact many urban and suburban area nationwide qualify. Most towns with 20,000 or less eligible. With that said most properties in these area including single family resident, condos, townhouses and other types may qualify. The home must also be your primary resident.

On qualifying you must not exceed 115% of medium income in your area, here’s a link for you to see if you income qualify. Check USDA Income Limits

You also need a debt to income ratio 29%/41%, your credit score needs to be 640 and above.
You need to be 2 years out of a bankruptcy. For all the requirement call me or go to this link ……

So Where's the Beef.....thought you'd never ask! 
If you are a smart home buyer you should be asking if you qualify for a USDA home loan, it’s fast becoming the new choice and pretty easy to qualify. Some say it’s fast becoming the new subprime option. It’s certainly worth getting all the information so you can make an educated decision before you buy. The rates are below 4% for a 30 year fixed at the time of the blog post, lower then both FHA and conventional.

With 100% financing and easy to qualify, this is a smart choice. Spread the word as many folks out there who are planning to buy don’t even know these loans exist. USDA can be used to purchase but also to refinance and remodel.  WE all pay into these programs so why not use them.

For more information about USDA and other home loans contact me for a FREE consultation. 

Thank you for stopping by my blog, please leave your comments or questions they are always welcome. 

Roxy Redenbaugh
ACMC Loan Consultant
Certified Mortgage Coach
Branch Manager
NMLS #269926

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