The United States Department of Agriculture stays true to their tagline, “We keep America’s agriculture growing.” This is a short but meaningful statement inspires them to always keep their heart in their missions.
The USDA ensures that our agricultural industry remains strong by drafting and executing agriculture-related laws. Moreover, the agency provides many financing options to assist eligible individuals in building stronger agricultural communities.
The department believes that providing homeownership opportunities in rural areas will help in the advancement of Rural America. The USDA Rural Development (RD) is the agency that comes up with ways to encourage more individuals to live in rural areas. To them, bigger rural communities are key ingredients for growth and development.
The RD offers USDA home loans to eligible homebuyers. The program is known for its lenient requirements and affordable financing. However, there are other amazing facts about the USDA home loan that also deserves the spotlight.
Here, we point out some facts that make the USDA home loan all the more amazing.
Zero Down Payment
Down payment is the most common hindrance to homeownership. Most conventional loans require a down payment which equals 20 percent of the home price. Some people just don’t have this amount of money, that’s why they back out from their home buying plans.
Thankfully, the USDA home loan offers 100 percent financing. Qualified borrowers may opt for a low or zero down payment. This allows the buyers to pay more towards their mortgage each month. And even with the 100 percent financing, the interest rates still remain affordable.
The USDA home loan requires a funding fee payable each month. However, even with the fee, it still remains as one of the most affordable sources of credit.
It is Reusable
Yes, you can use the USDA home loan over and over again. There is no limit as to how many times you can use this financing. However, you can only finance one home at a time. Technically speaking, you can’t buy a second home with a USDA home loan.
In short, the USDA home loan can only be used to purchase an owner-occupied primary residence. But if you sell your USDA-financed home, pay the loan completely and buy a new house, you can reuse the USDA home financing.
Talking about leniency, the USDA RD has a few exemptions to this rule. You may be allowed to purchase another property using a USDA home loan without having to sell your existing home. The exemptions are as follows.
When work requires you to travel more than 50 miles from your USDA-financed home.
When your family has outgrown the house. Too many children, too few rooms? USDA allows you to use this loan to purchase a house that’s adequate for your growing family.
More Relaxed Loan Limits
The USDA home loan does not directly stipulate a specific number for the loan limit in its guidelines. Each borrower’s limit is calculated based on the income limits and the DTI ratio requirements of the said program.
This makes it different from other federally-backed home loans where the loan limit is strictly established. Take, for example, the VA home loan. It typically follows the conventional loan limit of $424,000. For the FHA home loan, the limit is a bit higher for high costs areas, at $625,000. But in most areas of the country, it usually is lesser than that.
These are the three aspects of the USDA home loan that aren’t highlighted as much. Nevertheless, these things make this financing more amazing.
Although the USDA home loan is one of the best financing programs on the market today. It also cannot be denied that there are many more mortgage programs that offer attractive terms and rates. The FHA and VA loans are just as impressive as the USDA home loan. You can learn more about these financing options by talking to a lender today.