How Does the USDA Loan Program Work?
The USDA Loan Program works by having the Rural Development Housing and Community Facilities funding and providing affordable, safe and sanitary housing for very low income families in rural areas [ check income eligibility here ]. Due to this being a government program, there is funding that is available for financial assistance either to help with the loan directly, or by providing grants for home improvement. The USDA program also provides no money down loans as well, making this a very attractive offer for low income families. Remember that these homes must reside in USDA’s rural maps. These maps can be found at the USDA’s official website [ https://eligibility.sc.egov.usda.gov ]. As mentioned before, these rural areas do change based on population, leading to the expansion of some rural areas and the reduction of others.
The Benefits of USDA Home Loan.
- USDA Mortgage Rates : Low Mortgage Rates that have a maximum cap determined by Rural Development. This cap cannot be exceeded for any reason, and can be anywhere between 4.5 and 5.75%. This is much lower than other loan programs.
- Approval For Low Credit Scores : Easily approved with a 640 credit score, which also allows for the borrower to be able to obtain the home with no money down.
- USDA Area Eligibility : Currently, more than 97% of the US is eligible based on the current eligibility map.
- Lenient Qualification Criteria : Easier to qualify for than other loan programs due to more lenient guidelines.
- Longer Mortgage Terms : 30 Year Fixed Mortgage terms insures stability with mortgage payments and prevents any surprises. 15 year fixed rate mortgage terms are also available.
- Shorter Wait Time For Negative Credit : Shorter waiting periods for Bankruptcies, Foreclosures and other major negative credit events than most of the other loan programs. Other programs need to wait around 2 to 7 years to clear any serious credit inquiries, depending on what it is. The USDA Loan Program only needs 12 months after bankruptcies, and 3 years after foreclosures and short sales.