USDA Loans — United States Department of Agriculture Loans — are similar to FHA Loans in that they are meant for lower-income borrowers with credit that is less than perfect. The most important difference is that USDA Loans are only available for rural properties. The Department of Agriculture backs USDA Loans in an effort to safely populate rural and suburban areas.
One of the most attractive aspects of a USDA Loan is that it requires 0 down. Not having to wait years to save up a down payment — all while paying rent and living in potentially substandard housing — is a tremendous benefit of a USDA Loan. Additionally, if you own a home that is in need of repairs, you can get a USDA Loan to make these repairs.
Many homebuyers who would not otherwise qualify for a conventional mortgage may qualify for a USDA Loan. While a qualifying credit score is comparable to that of a conventional mortgage, you may be able to qualify with a low credit score or even with no credit score.
However, your income must not exceed a certain threshold to qualify for a USDA Loan. This number is determined by calculating a percentage of the median income for the area. If you are able to qualify for a conventional mortgage without having to pay private mortgage insurance, you are not eligible to apply for a USDA Loan. Additional considerations for these home loans include that the home must be your primary residence and that it cannot have an in-ground pool.
To learn if you qualify for a USDA Loan, contact PRMI McKinney, a leading mortgage lender in Texas.