Advantages of USDA Home Loans



While the USDA Rural Development Department offers a direct mortgage loan, they also offer a guaranteed loan, backed by the U.S. government, similar to FHA or VA loans.

Originally designed to help rural Americans realize the dream of homeownership, these mortgages can also be used to finance a wide array of properties from single-family homes to multifamily properties and even businesses. Plus, the USDA also provides grants for various development projects.

A USDA loan can be used to purchase, refinance, renovate, repair or even relocate a home. What many don’t realize is that these guaranteed loans offer 100 percent financing to income-qualified individuals, making them as close as you can get to a subprime loan, only with a safe, low fixed interest rate and payments! Be aware, however, that the USDA only guarantees 90 percent of the loan.

There are many advantages to choosing a USDA backed mortgage.

One hundred percent financing makes these loans among the most desirable of loan programs still in existence. The only other programs out there that offer this today are VA loans and transactional funding for those flipping houses.

Even better than just no down payment, going this route means the possibility of rolling in closing costs or use grants and gift funds, something most other programs won’t allow borrowers to do.

Want more? You may even qualify using “non-traditional” credit and you don’t have to have amazing credit to get approved either. You should have at least a 620 to 640 credit score, but you may be able to use credit references like cell phone, insurance and utility bills to build out your credit if you don’t have very much of it.

Plus, USDA direct home loan interest rates are some of the best around and often better than conventional mortgage rates. The rates on guaranteed loans are determined by the individual lender.

USDA-backed home loans are really designed to assist lower income borrowers, though who hasn’t found times a little more challenging lately? Well, unless you are Mark Zuckerberg, you have a gazillion shares of Google, or are next in line for promotion at Apple, you may have a good shot at getting approved. These incredibly attractive financing options are also ideal for those who want to take advantage of cheap land prices, buy foreclosures, fix up the home of their dreams or just move a little ways out of the city and grab a few acres for raising the kids with more room in a safer environment.

originally posted in by Tim Houghten

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