If you’ve never heard of a USDA loan, you’re not alone. In fact, you might even call the benefits of USDA loans a well-kept secret. Well, not anymore!
How USDA Loans Work
The USDA loan is a zero-down mortgage option available to a large portion of the United States. USDA loans are made by private lenders and guaranteed by the U.S. Department of Agriculture (USDA). They are offered to home buyers in less industrialized areas as a way to boost homeownership in rural areas.
USDA loans work similar to other government backed mortgage options. Homebuyers will work with a USDA lender, become preapproved, put in an offer on a home, go through the USDA loan appraisal, lender underwriting and finally on to closing.
While the $0 down advantage is key, these government-backed loans offer a host of other big benefits, too. Here are 10 facts and benefits of USDA loans that might surprise you.
1) Most of the U.S. is eligible.
You can purchase with a USDA loan only in a qualified rural area, but many people are shocked to learn how the USDA defines “rural.” Generally, according to their guidelines, it includes any areas with a population of less than 35,000. In fact, an estimated 97 percent of the U.S. is eligible for USDA lending.
So unless you have your sights set on the bright lights of an urban area, you are probably in luck to qualify for a USDA loan. These loans aren’t just for rural areas or farmers.
2) USDA loans are only for primary residences.
Looking for a sweet second home or even a rental property? Sorry, a USDA loan won’t be for you. Because if you’re asking, “Are USDA loans only for primary residences?”, the answer is yes. The requirements state that it must be used for a “primary residence,” where you live all the time.
3) Many property types are eligible.
When you hear “rural,” you might be thinking a big ranch or lots of acres, but that isn’t the case. Continuer la lecture de « 10 Things Borrowers Don’t Know About USDA Loans »