USDA Home Loan
If you are planning on buying a home, it pays to understand the various loan options available to you. This financing option aims to enable low-income individuals to purchase a home they can afford as it comes with zero-downpayment and low-interest rates. They are offered to people in rural areas as a means of boosting homeownership in less industrialized regions.
How Do USDA Mortgages Work?
USDA home loans work just like other government-backed home loan options. You work with a USDA loan lender, get preapproved, put down an offer on the house, get a loan appraisal, and lastly, to closing.
The zero-down payment is the biggest advantage of USDA loans, but there’s a huge array of other benefits you might not be aware of. That being said, here are several USDA loan benefits and facts that you might find interesting if not surprising.
You Can Have too Much Money to be Eligible for a USDA Home Loan
While this type of mortgage is appealing to most people, it is not for every budget. As mentioned earlier, the USDA and approved lenders look at your household income when assessing your eligibility. If you make more than 115% of the region’s median income, you cannot qualify for the loan.
The lenders assess the total household income and this includes individuals who will not be obligated to the new loan. The US Department of Agriculture’s income limits usually reflect the cost of living and may vary depending on the size of your family, where you are purchasing and more.
If you have queries about your eligibility, don’t hesitate to consult a USDA home loan specialist.
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USDA Mortgages are Just for Primary Residences
Are you on the search for a rental property or a vacation home? If that’s the case, then a USDA home loan won’t make the cut. That’s because USDA mortgages are meant for primary residences, or simply a house where you will spend most of your time.
USDA Loans Can be Secured Even When Facing Bankruptcy or Foreclosure
If you are facing financial hardship, you might have questions regarding USDA loans and bankruptcy. Well, the good thing is that you can still secure a USDA home loan even after foreclosure or bankruptcy. Generally, the USDA requires a 3-year waiting period in order to qualify for USDA mortgage after facing Chapter 7 bankruptcy or foreclosure. There are certain exceptions, but these are usually on a case by case assessment.
For Chapter 13 bankruptcy, the waiting period is one year, but you have to make a year of on-time payments.
As you can see, USDA home loans are quite appealing, and if you are eligible, there is no reason to consider it over other conventional types of mortgages.
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