USDA Home Loans-A Comprehensive Overview

You recently got a job in rural areas of Texas and are planning to get a home for yourself. You need a mortgage with reasonable rate of interest as your credit score is around 600. In that case USDA loans is the go to solution for you as you will be offered loan in the rural area of Texas, with your credit score and does not need a down payment. USDA aims at increasing home ownership across US, with the upper limit of $417,000 and no down payment, USDA loans are the go to means of getting loans for many. The eligibility rules are also relaxed as compared to other loans. Here are some basic factors about USDA home loans.

Basics of the Loan
USDA loans started in 1991 with an aim of boosting rural population and home ownership among rural residents. It is given for primary residence and the applicant should have the capability of being able to repay the loan, however, should not be able to take a second loan. Credit score of 640 is the minimum requirement for the application, however, frequent exceptions are made for the applicants based on their income.

Though USDA loans are given for rural area, they are not given to buy a second home, buy agricultural land and for speculation purposes, they are strictly for financing primary residence.

Eligibility for the loan
A USDA loan is for the applicants from rural area and small towns. The definition of small town in given in USDA that is modified as per Census report every few years. Hence, you might have to check whether USDA rules cover your town. Once you have checked about the availability of the rules, here are certain financial checks that you need to go through to get a loan.

Debt to Income Ratio
The combined percentage of PITI (mortgage Principal, Interest, Taxes and Insurance) should not exceed 29 percent of your total monthly income and total mortgage should be less than 41 percent of the monthly income.

Credit Score
You need a minimum score of 640. In case your score is less than 640 because you do not have a FICO recent history; exception can be made. Exceptions are based on your salary, present mortgage and your capability to pay the loan in the future.

Overall Income
While total income is calculated factors such as size of the family, future earnings prospect, disabilities and dependents are taken into consideration along with other factors.

Age and Other Qualification
You need to be minimum 18 years of age and a US citizen or a US national or a qualified alien.

Types of Loans
There are two kinds of loans given by USDA. First is direct loan, that is given directly by USDA and second is the guaranteed loan that is issued by the bank and guaranteed by USDA home loans. The requirement for both varies. Here is a quick reference for both.

Direct loan
Given directly by USDA to low income applicants, whose income is less than 80% of the area median income.

Guaranteed Loan
Given by the banks to applicants with broader income and the income has to be less than 115% of the area median income.

Conclusion
When you are moving to rural Texas and looking for a house USDA home loans can help you in getting the house that you need and help you with the down payment and even with the closure.

VA Home Loans-Ensuring Homes for Veterans in the US

VA loans are home loans available to the veterans of US army. These loans were first approved in 1944, under the guidance of President Roosevelt. Since then, they have benefitted millions of veterans and given them a chance at homeownership and a secure family life.

VA Home Loans: Making Home Ownership a Possibility for Veterans
Every state in the US accommodates the veterans by offering various benefits like easy home loans and special rehabilitation programs including the state of Texas. VA home loans are easily available for them through government as well as VA approved private lenders.

Taking note of the various problems that veterans face such as bankruptcy and poor credit scores, the department of Veteran Affairs designed the rules and regulations for VA loans in such a manner  that it is very easy to qualify for them as compared to other types of loans.

What  makes VA Loans Easier than Others?
1. Zero down payment
2. Easy repayment plans
3. Loan amount upto 100 percent of property value
4. Penalty Free Prepay System
5. Flexible interest rates

As mentioned before, the government policies are very lenient about the VA home loans and there are just a few pointers that decide the qualification of a veteran.

Honorable Discharge
VA home loans’ primary criteria is that a veteran applying for it must be  honorably discharged from the armed forces. Rest all the qualifying criteria such as credit scores, down payment and EMI, are flexible and have easy clause attached to them that makes almost every veteran eligible for a VA loan and also for refinance  of VA loan.

Time Service Record
A veteran who has served before 1980, has to show a war time service record of 90 days to qualify for the loan whereas those  who joined and served post  1981 have to show the service record of 2 years. Anyone below this time limit also qualifies, if the reason behind their discharge is service related disability.

Conclusion
So, this is how easy it is for veterans to qualify for a zero down payment in the state of Texas. VA home loan is definitely the reform that has benefited millions of veterans in the US since 1944.