What Are USDA Loans?
The USDA Rural Development Loan Program, or USDA loans for short, are designed to make rural housing more affordable. USDA loan program eligibility depends upon applicant income and the purchase property location. The USDA Rural Housing program is for residential purchases and rate-and-term refinances only – no cash out refinancing. All USDA loans are 30-year fixed rate mortgages.
USDA Loans – No Down Payment
One of the most appealing features of USDA Rural Development loans is that you can finance a home with no down payment. In other words, you can finance 100% of a home’s purchase price via the USDA.
USDA Mortgage Insurance
The USDA Rural Housing Program requires an upfront mortgage insurance fee at closing. The amount varies depending on loan size, but is relatively cheaper than FHA mortgage insurance premiums. If the upfront mortgage insurance premium is a burden, the USDA allows gifts from family and non-family members.
USDA Loan Eligibility
In order to utilize the USDA Rural Housing Program, your home must be located in a rural area. Although the term “rural” might not seem to apply to you – several suburbs and outlying communities of most major U.S. cities meet the USDA property location requirements. Check your property eligibility here: Rural Housing Property Eligibility.
Since the program is designed to help low-income individuals or households purchase homes – the USDA Rural Development Program also has income limits. Check the income limits for your area here: USDA Rural Housing Income Limits.