USDA Home Loans: Eligibility and Benefits

Rural Americans can now realize their dream of homeownership, without having to go through the hassles of obtaining conventional loans that have much more stringent qualifications. The United States Department of Agriculture, or USDA, offers Rural Development Single Family Housing Guaranteed Loan Program to potential homebuyers to buy a home in any of the “designated” rural areas. This mortgage program is available for the US citizens throughout the country including Texas through USDA-approved lenders. These state-specific lenders offer attractive loan terms to the applicants; provided they fulfill the eligibility requirements. USDA home loans Texas, for example, provide financial support to potential homebuyers with low or moderate income.

Read on to learn the basics of USDA loan before you apply for it.  
  

Eligibility Criteria

• Homebuyers primarily need to meet the following two requirements to qualify for a USDA loan: They can buy a home only in a USDA-designated rural area.
• Applicant's household income must not exceed 115 percent of the area’s median.

Other USDA Qualifying Standards

•  Homebuyers should not own any other home within the commuting distance of the intended property.
• The subjected property should be a primary residence.
• Homebuyers should ideally have a sound credit history.
• There should be a two-year gap before the loan application and bankruptcy discharge.

Benefits of USDA Loan

 Zero Down Payment

Eligible USDA home loan applicants need not make any down payments. They can enjoy the flexibility of paying nothing out of their pocket during loan approval process. In addition, home buyers can finance the entire 100 percent of the property value. Besides, this type of loan allows borrowers to use a gift or grant towards the payment of their mortgage and other loan-related fees.
 

Attractive Fixed Interest Rates 

USDA mortgage lenders offer competitive and attractive interest rates to qualified homebuyers and their families on the guarantee of the USDA. These loans are available for 30-year fixed interest rate mortgages. USDA Streamline Refinance Program is another significant feature of this Rural Development Home Loan.

No Purchase Price Limit

 USDA loan program has no maximum purchase price limit. It means borrowers can receive any amount of loan. Lenders, however, determines the maximum loan limit depending on the applicant's ability to repay. An applicant’s credit history is a crucial factor to consider in making this decision.
 

Flexible Credit History Guidelines

USDA loan borrowers need to submit their credit history report to the department while applying for the loan. The credit guidelines are, however, not stringent related to credit score and debt-to-income ratio. There are times when this flexibility allows prospective homeowners even with low credit scores to qualify for a USDA home loan.
 

Conclusion

USDA loan program has become popular in the US because of its numerous salient features and benefits. The objective of the program is to encourage people to live in rural areas, and these benefits are attracting potential homebuyers with financial constraints.