USDA Home Loans and Why They Are So Convenient

What is a USDA Mortgage Loan?

Home loans are sponsored by the Rural Housing Service (RHS) of the United States Department of Agriculture (USDA). These USDA home loans are also known as Section 502 loans. Under this section low income applicants can apply for direct loans (from money that is appropriated by the Congress). Besides that people whose total household income happens to be less than 115% of the median household income (in a qualified rural area) can also qualify for mortgages from legitimate lenders.

Purpose of a USDA Loan

USDA home loans are primarily used to aid low income families or individuals that buy homes in rural areas. A USDA loan allows candidates to finance about 103.5% of the actual selling price of a residential property.  They also don’t come with monthly mortgage insurance. USDA home loans can be used to buy, repair, renovate, and relocate a home. They can also provide water and sewage facilities to home as well as preparing sites.

The USDA program was originally set up to encourage farming. Agriculture is considered to be a major aspect of the country’s infrastructure. The promotion of home and property loan programs gave people an incentive to continue their agricultural pursuits. Later on, legislation expanded the USDA programs to other types of borrowers. This included financing the purchase of land and covered the cost of repairs and housing in general.

Qualifying Factors

An integral qualifying factor for USDA mortgage loans is the location of the property itself. In other words, if you want your home to be eligible for this loan, it should be within areas that are designated by the USDA as being “rural” in nature. Borrowers can contact their local offices that deal with local housing development for more info. USDA Areas

Moreover, it is important that the borrower use the property in question as his primary residence. In other words he/she cannot rent it out or occupy it on a temporary basis.  There are also some qualifying criteria that require the borrower to show evidence that proves that he/she does not have another property as a primary residence for the household. Other than that a USDA loan also requires that the borrower have a stable credit rating to qualify.

Most of the qualifying aspects for USDA are similar to FHA but the best part for most borrowers is that they can acquire the property with ZERO down and even ask if the seller will pay their closing costs, and because this loan is backed by USDA there is also no monthly mortgage insurance required – often times making it much more of a cost effective loan for borrowers than even FHA.  But again the client must be buying in an area where this product can be utilized – feel free to call Mark Taylor and his team at 602-361-0707 to find out iof you qualify for USDA financing and where these properties are locatd in Arizona and California.  Thanks so much for reading my article: USDA Home Loans and Why They Are So Convenient

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