USDA Loans
What is a USDA Loan?
Surprising many Americans, the USDA goes beyond just agriculture and assists with rural development. A USDA loan, utilized through the Single Family Housing Guaranteed Loan Program, is designed to help families in rural areas to become homeowners, establish long-term communities, and develop a higher quality of life.
Benefits of a USDA Loan?
To do this, USDA loans offer a no down payment option and lower interest rates, often as low as 1%.
Typically, homebuyers will only have to pay for the closing costs and guarantee fees. A guarantee fee is a substitute for mortgage insurance that a homebuyer will pay upfront and annually for the duration of the loan.
1.
Rural Area
For those that wish to live in a rural area, USDA loans can provide a low-cost option to live a life that fits those preferences.
2.
No Down Payment
USDA does not require a down payment which allows those with less savings to become homeowners.
3.
Lower Mortgage Insurance
While mortgage insurance is included in the monthly payment, it is much lower than other loan types.
USDA Loan Characteristics
Down Payment: There is no minimum down payment requirement.
Loan Options: There are fixed rate options in loan terms ranging from 10, 15, 20, 25, and 30 years based on your specific goals and needs.
Property/Residency Types: USDA is for owner-occupied single-family residences located in eligible areas. Please refer to USDA’s map to determine property eligibility: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp
Guarantee Fee: USDA requires an upfront guarantee fee of 1% to be paid. This can be financed into the loan amount.
Mortgage Insurance: There is an annual mortgage insurance amount that is included in your monthly mortgage payment.
Insured: USDA loans are backed by the U.S. Department of Agriculture.
Ideal Candidates for a USDA Loan
Borrower: First-time homebuyers or repeat homebuyers that want to move to a rural area at low-cost.
Qualification: There are income limits for USDA loans. The income calculation includes all occupants living in the home regardless of if they are obligated to the loan. Please refer to USDA’s income eligibility tool: https://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state.
Credit score: Minimum credit score is 600.
Next Steps to Getting a USDA Loan:
If you believe you are eligible for a USDA loan, the next step will be booking an appointment with Desert Canyon Mortgage to start the homebuying process. We recommend reviewing our homebuying timeline and pre-approval document checklist before making an appointment. Once complete, click HERE to start the loan application process.
