Unconventional home loans
All About USDA Loans
The United States Department of Agriculture
(USDA) offers several different loan types aimed at helping
homeowners buy farm property. USDA loans are an affordable option
for many families, since most require little or no money up front
and credit score requirements are less stringent than they would be
for a traditional loan. Your eligibility for a USDA loan will depend
on where you live and the size and price of the property you are
interested in buying. Is a USDA loan right for you? Here are a few
key details that can help you decide:
- Loan Types
– There are two different loan programs
offered by the USDA. The first is a direct loan program, where the
agency directly funds the applicants and payments are made to the
USDA. The second is a loan guarantee program, similar to the program
used for federal student loans, where the USDA guarantees the loan
with a conventional lender or bank. The loan that you qualify for
will depend on your income and the property you are buying; each
loan type has its own standards and guidelines.
- Property
– USDA loans are designed to build and
promote rural communities, so the location of the property will
determine if it is eligible for a loan. Many rural properties are
covered in the program, so even if the home you are considering is
not a farm, you should still check the USDA property eligibility map
to see if your home qualifies – the results may surprise
you.
-
Income –
The amount of income you need to qualify for a USDA
direct or guaranteed loan may be different from the amount you need
for a traditional loan. The USDA government site has a calculator
you can use to determine your eligibility; it uses the amount of
income you earn, the number of people in your household, and the
average income in your property search area to determine if
you are eligible.
Ask a local Homes & Land Realty Expert any questions you may have about the home buying process or begin your new home search now by reviewing our complete list of real estate listings.
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