If you are planning to buy a home, you can opt for the FHA loans or USDA Rural housing loan. But sometimes, it becomes a bit confusing to choose for anyone for them
It will assist you to make a precise decision. Therefore, if you are living in Tennessee and searching for the USDA home loans in Tennessee or FHA home loans, Tennessee, look nowhere else. Here is the comparison that we are talking about.
USDA home loans
Well, as the name suggests, USDA home loans are the brainchild of the U.S. Department of Agriculture. The main motto of this loan was to help the farmers as well as families with low income. This loan will help them to get a home in the different rural parts of the country. The exceptional part about this loan is that almost all of America is eligible to get this loan. According to the definition of rural areas by USDA, 97% of America falls under that definition.
Benefits of USDA loans
Now, let us fathom the benefits of the USDA loans.
No down payments.
Low premium on mortgage insurance.
Mortgage rates are pretty competitive.
They accept the high debt-to-income ratios.
They are best for the low household’s income.
Requirements of USDA loans
Minimum credit score of 640.
The property must be located in the eligible location of USDA.
The income limit shouldn’t cross the 115% of the area median income.
You must have steady employment of 2 months.
There shouldn’t be any late mortgage payments in the last 30 days.
The first thing about Federal Housing Administration Loan that you must know that is you have to pay a sizeable down payment. The next thing about the FHA loan is that you need to have a brilliant credit score to avail this. Well, this is the most famous loan amongst first-time buyers. This loan is compatible with the people who don’t have much money to spare. One of the significant facts about FHA is that they don’t issue mortgage loans. Instead, they ensure the loan. When a borrower evasions on the mortgage, the FHA pays the remaining amount to the lender. After that, they take ownership of the house.
Benefits of FHA loans
The interest rates are pretty low.
Bothe fixed, and adjustable rates are available in case of the mortgages.
Fixed-rate mortgage terms are for 15 years and 30 years.
Besides, the low credit score is required.
The down payment is only 3.5%.
Compared to conventional loans, it is easier to qualify.
Loan requirements for FHA
You have to pay the down payment of 10%, and your credit score must be 500-579.
If your credit score is 580+, the down payment will be 3.5%.
An FHA appraiser must do the home appraisals.
There shouldn’t be any late payments regarding mortgages in the last 12 months.
You have to wait for two years after you witnessed a bankruptcy.
This loan applies only to owner-occupied borrowers.
Well, if you can meet all the requirements, we would suggest you opt for the USDA Home Loans Tennessee or USDA Rural Housing Loan . Unlike the FHA loans, you don’t have to bother about the down payments. Also, USDA has lower mortgage insurance rate than the FHA.