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USDA loans, or Rural Development loans, are great mortgage options for qualified borrowers looking for homes in eligible areas. Many people are hesitant to utilize these programs because they don’t understand their potential benefits. We’re shedding light on common misconceptions about USDA loans and how they may be able to help your goals of homeownership.
Fact: While the USDA loan program was initially designed to help develop rural areas, this is no longer the program’s sole purpose. It’s now used to make homeownership available for more people. While property locations must be in an area deemed “rural,” suburbs can also be included. According to the Housing Assistance Council, 97% of American land is within USDA-eligible boundaries. To find out if the property you’re interested in is eligible, check out the interactive map on the USDA website.
Fact: USDA loans are available for many homebuyers, whether it’s your first or fifth home! This loan program is available only for primary residences and cannot be used for vacation or investment properties.
Fact: All loan programs have different requirements. Your credit and debt to income ratio will be examined like any other mortgage. However, USDA loans have more lenient credit requirements when compared to other mortgages, like conventional programs. Lenders want to be sure you can make your monthly mortgage payments.
Fact: Some homebuyers believe you can only purchase a home if you put 20% down, but that’s simply not true! USDA loans are available without the need of a down payment!
Fact: With a conventional loan program, if a homebuyer provides a down payment smaller than 20% of the purchase price, they must have private mortgage insurance. This isn’t the case for USDA loans. Even with zero down payment options, USDA programs have low monthly mortgage insurance.
Fact: USDA loans are available for purchase, refinance, or renovation! USDA renovation loans offer 100% financing and allow for financing for up to six months of mortgage payments if the home can’t be occupied.
Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.