The “Rural Housing” USDA Loan is a true 100% financing program federally insured by the US Department of Agriculture. It is called a Rural Loan by the USDA because it is handled by the Rural Development Department.
The USDA Mortgage is popular for many reasons. There is no down payment required, making it a true 100% financing program. In addition, the USDA Loan saves you a considerable amount each month compared to other programs. This is because the mortgage insurance is much cheaper. The seller of the home can pay all of your closing costs. This saves a buyer a lot of cash needed at closing. There are no purchase price restrictions on the home. The USDA does not require perfect credit to apply for the mortgage. The program allows for credit or financial mistakes in the past. Generally speaking, the program is more flexible. The interest rate is low and there is no penalty for not staying in the home or paying it off early. This is important, as other programs require you live in the home a certain amount of time. The USDA home loan does not require you to be a first-time buyer. This, again, is unlike other programs designed just for first time buyers.
There are some restrictions with the program. Town restrictions limit the area you can use the program to purchase a home. To find out if the property you are looking to purchase is eligible click here. The USDA Mortgage also has income restrictions which vary depending on the size of your family.
Applying for a USDA Loan is simple. The time frame on a USDA loan is typically between 30 to 45 days from start to finish.