USDA Loans
The United States Department of Agriculture (USDA) gives out a variety of loans to help low- or moderate-income people buy, repair or renovate a home in a rural area. Some of the popular types of loans are: the single family direct homeownership loan, the single family guaranteed homeownership loan, the rural repair and rehabilitation loan or grant and the mutual self-help loan. This guide will help you figure out what these loans are and whether you qualify.
Though the terms and details of these loans differ, all offer very low effective interest rates (some are as low as 1 percent) and don’t require a cash down payment. To qualify, you need to have a decent credit history.
USDA Loan Characteristics
1) USDA loans are backed by the U.S. Department of Agriculture and are designed to help low- to moderate-income borrowers purchase homes in eligible rural and suburban areas
2) These loans often require little to no down payment, making homeownership more accessible for qualified buyers
3) USDA loans typically have lower interest rates compared to conventional mortgages
4) Borrowers are required to pay an upfront guarantee fee and an annual fee, which help protect the lender in case of default
5) Income limits apply, meaning borrowers must meet specific household income requirements to qualify
6) The home being purchased must meet certain property eligibility standards, including location and condition
7) USDA loans are intended for primary residences, so investment properties or vacation homes are not eligible
8) These loans can be an excellent option for first-time homebuyers or those with limited savings who want to purchase in rural or suburban communities
5) VA loans do not require mortgage insurance, which can save borrowers money on their monthly payments
6) VA loans have flexible credit requirements, which can help borrowers with less-than-perfect credit still qualify for a mortgage
7) VA loans can be used to purchase a variety of property types, including single-family homes, multi-unit properties, and condominiums
8) VA loans allow for options for refinancing, including streamline refinancing and cash-out refinancing, which can help borrowers lower their monthly mortgage payments or access equity in their home.
Disclaimer: Johnnie Fleming, NMLS #1177346 – NEXA Mortgage ("LD," "We," "Us," "Our") is exempt from mortgage and NMLS licensing for the states we lend in. Our loan products require a business purpose, and the property must be used as a non-owner-occupied investment property, also known as a rental property. Our rates, loan terms, and loan conditions are only offered to qualified borrowers, and may vary based on loan product, credit score, real estate investment experience, deal structure, property state, and several other applicable considerations. Our rates, loan terms, and quotes, are subject to change daily, at any time, with or without notice. Loans requiring less documentation may result in a higher interest rate and higher annual percentage rate ("APR").
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