All you need to know about the USDA rural housing loan

It has not only helped them to buy their dream homes but also improved their living conditions. If you are a first time buyer with a moderate income then the USDA mortgage loans gives you the opportunity to buy homes of your own choice. Unlike other financial companies, which demand a high down payment and high interest rate, USDA comes with policy of zero down payment and cost-effective loan.

Different types of USDA loans:

USDA offers you low interest rates, 100% financing and zero down payment. Let us take a look at the two different types of USDA loans.

• Direct home loans: Direct home loan, as the name suggests, states that the funds are being directly approved by the USDA. No lenders are involved in these types of loans. In order to avail their direct home loan benefits, visit your near local USDA office.
  
• Guaranteed home loans: being one of the most popular loans in America, Guaranteed home loans provide their funds through USDA approved lenders. These lenders are backed by the government and the government are in charge of compensating the losses. It involves less risk. The lenders are ready to offer USDA loans on their won will. In order to avail the guaranteed home loan benefits, visit any lender who works with USDA loans.

USDA mortgage loans are especially available for those who have a low to moderate income. They have their own eligibility guidelines and qualifications which help USDA to filter out families with those who have sufficient income to finance their own houses. Some of the eligibility guidelines are mentioned below.

• Property eligibility: whenever you are buying any property and availing the USDA loan, make sure that the property is located within the USDA approved rural areas. Because USDA finance only houses located in rural areas. They do not finance for an existing mobile loan. Only properties that are used as the primary property and not for investment purposes are financed by USDA loans.
• Income eligibility: the most important criteria for availing USDA loans are that you must have a steady source of income. This ensures that they can repay the loan within a certain period of time. Prior to filling loan application, you should have a history of 24 months steady employment. Total Debt and PITI for the borrower should be 41% and 29% of the total monthly income respectively. There is a maximum income limit for the area, the borrower must qualify all these criteria before applying for the loan.
  
• Credit eligibility: you must have a minimum credit score of 640 to avail their Loans. All the bankruptcies should be settled within 3 years. Repetitive late payments are not acceptable.
• Borrower’s eligibility: USDA finances only those families who are the permanent citizen of U.S. non-resident co-borrowers are not applicable to avail their offer. The borrower or the applicant must live in the home which the USDA has financed. All first time buyers and repeat buyers are allowed to avail the USDA loans.