Buying A Home With USDA

A USDA mortgage, also known as a USDA Rural Development Guaranteed Housing Loan, is a type of mortgage loan offered by the United States Department of Agriculture (USDA) to encourage home ownership in rural and suburban areas. The USDA mortgage is available to both first-time homebuyers and current homeowners who meet certain eligibility requirements.

To qualify for a USDA mortgage, borrowers must meet several criteria, including:

  1. Location: The property must be located in a designated rural or suburban area. You can check if a property is eligible by visiting the USDA’s eligibility map on their website.
  2. Income: The borrower’s household income must not exceed the maximum limit set by the USDA. The income limits vary by location and family size, but generally range from $91,900 to $153,400 for a household of four.
  3. Credit Score: Borrowers must have a credit score of at least 640, although some lenders may accept lower scores with additional documentation and a higher down payment.
  4. Employment: Borrowers must have a steady income and employment history for at least two years.

Once a borrower meets these requirements, they can apply for a USDA mortgage through a participating lender. The USDA does not directly lend money to borrowers, but rather guarantees the loan through a private lender. This guarantee reduces the lender’s risk and allows them to offer more favorable terms to the borrower.

Some of the benefits of a USDA mortgage include:

  1. No down payment: Borrowers can finance up to 100% of the purchase price of the home, which means they do not need to put down a down payment.
  2. Low-interest rates: USDA mortgage interest rates are often lower than those of traditional mortgages.
  3. No mortgage insurance: Unlike FHA and conventional loans, USDA mortgages do not require borrowers to pay for mortgage insurance.
  4. Flexible credit requirements: While a minimum credit score of 640 is required, USDA mortgages are more flexible than other types of loans, making them a good option for those with lower credit scores.
  5. Closing costs: Borrowers can include the closing costs in the loan amount, which can help reduce out-of-pocket expenses.

In summary, a USDA mortgage is a government-backed loan designed to help low- to moderate-income borrowers purchase homes in rural and suburban areas. It offers several benefits, including no down payment, low-interest rates, and flexible credit requirements. To be eligible, borrowers must meet certain criteria related to income, location, credit, and employment.

Share the Post:

Related Posts


RSS CNBC Real Estate News

Sign Up For Our Newsletter

No annoying sales tactics just simply market updates along with some cool current events.

Let's Get You Prequalified to Start Shopping Now!

Let's have a chat