USDA Mortgage Loans

USDA Mortgage Broker in MD, DC, VA

If you are thinking about buying property in a more rural area away from the city, then you may want to look into applying for a USDA (U.S. Department of Agriculture) mortgage loan. USDA mortgage loans were established in 2014 as part of the Rural Development program. Around $20 billion was put into the program in an attempt to help around 140,000 families to buy as well as to make home improvements.

How Does the USDA Mortgage Loan Work?

USDA mortgage loans are similar to FHA and VA-backed loans in that the USDA will guarantee mortgages issued by local lenders participating in the program. This means that if you qualify for the loan, you’ll be able to take advantage of lower interest rates without having to make a down payment. The only catch is that if you don’t make a down payment or make a very small down payment, then you’ll have to pay monthly mortgage insurance. Direct loans are provided to low income applicants in which the interest rates can be as low as 1 percent once subsidies kick in. In addition to USDA’s direct loans, they also provide home improvement loans and grants that allow homeowners to either repair or upgrade their homes.

Who Qualifies for USDA Mortgage Loans?

The USDA will issue their USDA mortgage loans to the applicants that they deem to have the greatest need. The following are applicants that the USDA deems to have the greatest need for their mortgage loans:

  • Applicants without housing that is deemed as being decent, safe or sanitary.
  • Applicants that are unable to secure a mortgage loan from other sources.
  • Applicants whose adjusted income is either at or below the low-income limit in the area where they are planning on purchasing a home.

Applicants must also meet the following requirements in order to qualify:

  • Applicants must be U.S. residents or permanent residents.
  • Applicants must have dependable monthly income going back for two years.
  • Applicants must meet certain credit criteria, including having no accounts that were converted to collections over the past year.

The monthly payment on the house, which includes principal, interest, homeowners insurance and taxes, must be 29 percent or less than the applicant’s monthly income. Higher debt ratios may be considered if the applicant’s credit score is above 660. Additionally, the USDA only gives out direct loans for homes that are 1,900 square feet or less and that have a market value that is below the area’s loan limit. This loan limit varies throughout the country. Homes in metropolitan areas are usually excluded while rural locations are always eligible.

Apply for a USDA Mortgage Loan Today

If you meet the requirements for qualification and you are looking to purchase a home located in a rural area, then you may want to consider applying for a USDA mortgage loan. Just remember, you’ll need to go through a participating lender. For more information about applying for a USDA mortgage loan and for information about other types of mortgage loans, be sure to contact Alex Echeandia today.