- USDA loans were designed for eligible individuals who live in rural areas of 20,000 or less.
- USDA loans are guaranteed by the United States Department of Agriculture.
- USDA loans can be used for home purchase or home renovations and repairs.
- USDA loans allow up to 102% financing with no down payments.
- USDA loans require a one-time upfront Guarantee Fee that can be financed into the loan balance. There is no ongoing monthly mortgage premium for USDA loans.
- USDA loans have easier qualification criteria as compared to conventional and FHA loans.
- For a fixed rate USDA loan, the interest rate remains fixed for the life of the loan. The payments also remain level for the life of the loan and are structured to repay the loan at the end of the loan term.
- To determine whether your new home falls into a rural area as classified by the USDA, visit the USDA website at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do.
- The property must be on 8 acres or less.
- Borrower must pay a one-time upfront “guarantee fee” that can be financed into the loan.
- To obtain a USDA loan, the borrower must have a credit score of 600 or greater.
- The borrower’s income cannot exceed 115% of the U.S. median income, adjusted by family size.
- The borrower does not need to be a first-time homebuyer but must intend to occupy the property.
- Sellers can contribute the full amount of the borrower’s closing cost, plus up to an additional 4% of the sales price.
- You may be surprised as to how many homes will qualify for a USDA loans.
- Small towns and cities on the outskirts of major metropolitan cities often qualify as rural areas.
- Talk to your American Home Free Mortgage loan expert to find out if your home qualifies for a USDA mortgage.
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