The United States Department of Agriculture (USDA) offers a loan program for rural borrowers who meet specific income requirements. The program is managed by the Rural Housing Service (RHS), which is part of the Department of Agriculture.
Benefits of a USDA Loan:
- 100% financing of purchase price
- Seller may help cover closing fees
- You might be able to roll the remaining closing fees into a monthly payment
- USDA guarantee
Requirements for a USDA Loan:
- The homebuyer's adjusted annual income cannot exceed 115% of the area median income, depending on the family size
- Rates start with borrowers who have a minimum 640 FICO credit score
- A single-family home that meets the rural location parameters
Another benefit of the USDA loan is it doesn't require private mortgage insurance, unlike other loan options (FHA has a monthly PMI fee to make up for the low down payment). It is important to know that a USDA loan requires two additional costs: you pay the first portion when you close on your loan, and the second is built into your mortgage payment once a year.
Did you know? The USDA defines a qualified "rural" area as any area with a population under 35,000.
To learn more about USDA loans and if this is the right option for you, contact us at 717-971-0025.