How to Buy a House With a USDA Loan
If you are looking to buy a home and are in need of a USDA loan, this video will help you get started on the process.
Link to USDA site for eligibility: https://eligibility.sc.egov.usda.gov/
USDA loans also do not require mortgage insurance premiums. In addition, USDA loans have geographic restrictions and require no down payment.
USDA loans are limited to single-family homes, which means that you can’t buy investment properties or second homes.
If you are worried about paying high mortgage insurance premiums, a USDA loan may be the best choice for you. It can help you purchase a house with no money down and lower your monthly mortgage payments.
Furthermore, they don’t require homeownership counseling, and a vast majority of closings are completed in 45 days.
USDA loans do not require private mortgage insurance, unlike conventional loans. These loans come with a one-time guarantee fee equal to a percent of the loan amount and an annual fee of 0.35% of the loan amount.
The upfront fee is usually paid at closing, and the annual fee is spread out over the life of the loan.
Unlike the private mortgage insurance (PMI) fees that apply to conventional loans, USDA mortgages have low annual fees.
Requirements for getting a USDA loan
To apply for a USDA loan to buy a house, you need to meet certain requirements. The income limit for a USDA loan is 115% of the median income of your area or less.
You can also submit alternative documentation of your credit history if you have no or limited credit
Also, you must intend to make the home your primary residence. If you plan on renting the home out, you cannot apply for a USDA loan.
When applying for a USDA loan, you’ll need to provide documentation proving your stable income and your ability to make the mortgage payments. You need to be employed and earning a fixed income for the past two years. You can switch jobs within the two-year period, but your income must remain stable.
However, unlike other home loans, USDA home loan requirements are lenient compared to other types of loans. This makes these home loans more affordable to many buyers.
Another advantage of USDA loans is that you do not have to pay any down payment. With a USDA loan, you can even borrow up to 100% of the home’s appraised value. The difference can be used to cover closing costs, utilities, and repairs.
The interest rate of a USDA loan will depend on participating private lenders. The rate of interest charged on a USDA loan is usually fixed and 30 years.
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