What is a USDA Loan and How do I Qualify?

Let’s Talk. (512) 799-0133. By MortgageLendingStation.com

TEXAS residents: If you’re not aware, the U.S. Department of Agriculture (USDA) has a great, but little known, loan program that can help you purchase a home with little or no money down. This loan serves a small fraction of the U.S. housing market and most banks don’t offer them; however, we do! J If you are thinking of buying a home, this is a program you’ll want to check out. Image

Click to see today’s USDA mortgage rates.

A common fallacy about USDA loans is that you must buy farmland or purchase property in remote communities in Texas. This is simply not true. These loans are available for persons who purchase single-family homes in traditional neighborhoods (for primary residences only). While the USDA requires that you buy in a “rural” area to qualify for this type of loan, the definition of “rural” is fairly loose and often includes suburban areas in major cities.

3 Big Benefits of USDA Loans:

  1. No down payment requirements. You thought there were no zero down loans available since the mortgage implosion of 2008? Think again. This loan was designed to assist low to moderate-income buyers transition from renters to homeowners.
  1. Low upfront and monthly MIP (mortgage insurance premium). Unlike it’s FHA counterpart, the USDA has kept their MIP fees to a minimum to help with making it affordable. FHA currently charges an upfront fee of 1.75% and a monthly premium as high as 1.55%. Meanwhile, USDA’s upfront fee is 2.0% (don’t worry, you can finance this fee into the loan) but only 0.4% monthly premium. For example, a $100,000 home loan size in Texas, would require a $2,000 up-front fee but only a $33.33 mortgage insurance monthly fee.
  2. Interest rates are low. Even though this loan provides 100% financing, the interest rates are highly competitive with the FHA loan.

There are certain loan criteria unique to USDA, such as income limits. But it’s worth investigating because the down payment requirement and other loan terms are highly favorable and it allows you to help stretch your home-buying dollars.

Click here to check your home’s USDA loan eligibility.

“Where do I start?” Ask me, your mortgage lender, about USDA loans to see if you qualify. You also can learn more about USDA loans here.

Let’s Talk. (512) 799-0133 or email me at questions@mortgagelendingstation.com

Freddie Marmolejo NMLS# 328534

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