BiggerPockets

6 Reasons you’ll Love the USDA Home Loan

Sunday, October 04

 Qualifying for a mortgage isn’t like it was in the “good old days” of the early to mid 2000’s. There are a number of reasons potential home buyers seem unable to buy their dream homes. It could be because they don’t have a large enough down payment or that they don’t have a credit score. Good news, the Federal Government is here to help. It’s called the USDA Guaranteed Home Loan. Here are 6 things to know and love about the program.

1. A True 100% No Money Down Loan

The USDA home loan program requires no down payment and you may finance up to 102% of the appraised value. Since the end of down payment assistance programs in 2008, the USDA home loan program is one of the only remaining 100% loan programs.

2. There are no Limits as to the Amount You Can Borrow

The USDA Home Loan program will finance what you can afford to pay. Unlike conventional loans which are insured by Freddy Mack or Fannie May, there are no official loan limits. The amount of the loan will be directly related to your ability to repay the loan.

3. No Mortgage Insurance

The USDA home loan program requires no up front or monthly mortgage insurance; saving you hundreds of dollars each month. With FHA loans, you have both an up front mortgage insurance premium and a monthly mortgage insurance payment.

4. No Credit Score Required

Unlike most home loans, the USDA Home Loan does not require a credit score. Instead, borrowers can use things such as rental history, insurance payments or utility bills to verify their credit worthiness. Check the USDA Home Loan credit guidelines to learn more.

5. Seller Concessions Allowed

The USDA Home Loan program, there are no rules regarding closing costs and who pays what portions. Some loans limit the seller concessions, but under this program the negotiations are not controlled.

6. The Rural Areas Are Not Necessarily That Rural

The USDA Home Loan is guaranteed by the United States Department of Agriculture. People may wrongly assume that this loan is meant for farmers or ranchers. No, many homes in smaller cities as well as those in outlying suburbs of metropolitan areas are also eligible. Check your USDA Home Loan eligibility or contact a USDA Home Loan approved lender to see if your property qualifies.

There you have it, 6 important reasons the USDA Home Loan should be considered when purchasing a home. Lenders must be approved to offer these loans. Find a USDA Home Loan lender and start the house hunting today.