USDA

USDA Loans

As you evaluate potential mortgage loan programs, you may find that a Rural Development
Guaranteed Housing Loan—more commonly known as a USDA loan—is an ideal choice.

These loans are insured by the U.S. Department of Agriculture (USDA).

One of the major advantages is its 100% financing option. There is no minimum down
payment.

To be eligible for USDA financing, your home must be located in a rural area. However, the
USDA’s definition of “rural” is broader than the name implies. For example, it doesn’t have to be
a farm or home located in the countryside. Many small towns, as well as suburbs of major cities
qualify.

Available to both first-time and repeat buyers, the Rural Housing program is limited to 30-year
fixed rate mortgages.

Other notable points include:

*USDA financing can only be used for the borrower’s primary residence.

*The borrower must be a U.S. citizen, permanent resident or a qualified alien.

*The seller can pay your closing costs, which might include lender costs, state and local
government fees, title charges, and home inspections.

*There is no minimum credit score. However, 640 is usually considered a minimum
qualifying score.

*Mortgage insurance rates for USDA loans recently changed. Effective October 1, 2012,
the rate for purchases and refinances is a 2.00% upfront fee paid at closing, based on the
loan size. You are able to finance the Upfront Mortgage Insurance payment into the loan
amount.

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