Vanguard Properties
The US government has been helping Americans achieve their goal of homeownership for decades. Through programs offered by the Federal Housing Authority, the USDA, and the Department of Veterans Affairs, millions of Americans have been able to afford a home who would have otherwise struggled.
The focus of today’s post is one such service: loans offered through the USDA Rural Development program.
If you’re hoping to buy a home in the near future but are worried about being able to save up enough for a down payment or build your credit score in time, USDA loans could be a viable option.
Let’s take a look at some of the common questions people have about USDA loans:
The short answer is “no.” rural development loan eligibility for your area is laid out on a map provided by the USDA. Most of the suburbs outside of major cities, as well as nearly all rural areas, are covered by the rural development program.
Yes. You may be eligible for a loan as long as you’re not the current owner of a home that was purchased through the rural development program. So, for example, if you own a home financed through the USDA and wanted to buy a second home and rent out the first one, you wouldn’t be able to finance your second home through the USDA.
When you buy a home, a lender asks you to make a down payment. If you don’t have a down payment, the government (USDA, VA, or FHA) insures the down payment on your home rather than you paying it up front.
Unlike other subsidized loans, rural development loans require a “guarantee fee” rather than PMI (private mortgage insurance). The guarantee fee is 1% the total mortgage amount and this can typically be financed into the loan (so you don’t have to pay up front). In addition to the guarantee fee, USDA loans also charge an annual premium for the lifetime of a loan.
To find full eligibility information, complete the survey on the USDA’s eligibility website to find out if you qualify. However, the general qualifications are:
U.S. citizenship
Buying a home in a qualifying area
24 months of income history
A credit score of 640 or higher for streamlined processing
Income high enough so that your monthly payments do not exceed 29% of your monthly earnings
The USDA really offers multiple urban development loans. The guarantee program, for which most single families utilize, and the direct loan program. Direct loans are designed for families who have the greatest need. You can also find out if you’re eligible for a direct loan by filling out the questionnaire on their website.
Selina Zhao is a tech savvy real estate agent who brings over the top-notch marketing strategies, presentation, and negotiation skills to her clients. Selina always stays on top of the real estate market trends and stats. She applies strategies into different market situation and empower her clients to achieve their ultimate goal. During the first year of her real estate career in the Bay Area, she achieved an impressive $22.8M in sales. Selina’s experience on real estate sales ensure her clients get the care and attention they need as they make the crucial decision of buying and selling properties. Selina is vowed to provide excellent service, communication, and always an advocate for her clients.
Selina loves real estate, her career blended in perfectly to her daily life, and she loves to help others to achieve their American dreams. She works restlessly to get the work done. Immigrated from mainland China in 2007, graduated from University of Miami, Selina established her own online marketing company and her real estate career in Miami, Florida before moving to San Francisco in 2017. Her soul of entrepreneurship and cares for others encouraging her to pursue to be the best in the industry. Selina is also a former Miami HEAT video producer, who witness the team winning their 2012 NBA championship at the courtside.