The USDA (short for United States Department of Agriculture) doesn’t just certify that your favorite cut of beef is fit for the grill; among many other things, it also guarantees or directly provides loans to qualified homebuyers in rural communities. If you’re a low- to moderate-income applicant in an eligible rural area, USDA financing might be a good option for you.
Types of USDA loans
Direct loans
For low-income applicants. These loans are issued directly from the government to the buyer, and require no down payment or USDA Guarantee Fee.
Guaranteed loans
For moderate-income applicants. A guaranteed loan is not made directly by the government, but rather by lenders who receive backing from the USDA in the event the borrower defaults on the loan. You’ll pay no money down, but you will have to pay USDA Guarantee Fees.
Other buyer benefits
In addition to saving money on a down payment, you’ll also enjoy these advantages of a USDA loan!
- Gifts are allowed: No down payment means you won’t need gift funds from a family member, but gifted money can be used to pay closing costs.
- Less than perfect credit: You don’t typically need spotless credit to qualify for a USDA loan. The USDA Guaranteed Loan Program accepts lower FICO scores.
- No first-time homebuyer requirement: Some loan programs require you to be a first-time homebuyer, and to take homeowner counseling. With the USDA, however, a history of homeownership will not impact your ability to get a loan.
How can I learn more?
Contact HomeAmerican Mortgage Corporation (HMC) (see licensing info) to learn about current programs and find out how to quality. Call a mortgage loan originator toll-free at 866.400.7126 today!
