The United States Department of Agriculture, or USDA, has its own mortgage assistance program. There is no down payment required with this loan and it is especially appealing to many first-time home buyers. It also is designed to help those who would have trouble coming up with the traditional lump sum needed for a down payment. If you have been looking at homes in rural areas, a USDA home loan may be the right solution for you.
However, like any mortgage, it is essential to understand the basics of the program before you commit. We've put together a list of four of the most commonly asked questions about USDA loans to help you figure out if it is a good option for you.
- Are USDA loans easy to get?
The USDA loan is backed by the Department of Agriculture and has specific requirements in place to qualify. Some of the most critical qualifications include being a US citizen, keeping a monthly payment less than 29% of your monthly income, having a dependable income (usually for a minimum of 24 months) and an acceptable credit history. For many, qualifying is easy.
- How much can I borrow with a USDA loan?
There is no set dollar amount limiting what you can borrow with a USDA loan. The mortgage amount is capped based on your current income and debt.
- Can USDA loans be used to build a house?
There are several different options for USDA loans. One of these is a USDA new construction loan. If you qualify for one of these loans and choose land in an acceptable location, then yes, you can use it to fund the cost of building a house.
- Are USDA loans and FHA Loans the same?
Nope. USDA loans and FHA Loans are quite different. The only similarity is that they are government-sponsored programs. With the USDA loan, there is no down payment required, and it is only applicable in rural areas. The FHA loan does require a minimal down payment and may be used on homes in many other locations where USDA loans would not be an option.
Figuring out whether a USDA loan is right for you is an important decision. This is something you should not decide without talking with a professional. Reach out to us at First Liberty Financial Mortgage in Nashville, Tennessee today, and let us guide you through the process. We would love to help you find the ideal loan to get you in the home of your dreams.