Because of the pandemic, many Americans have decided they need more space at home. Urban dwellers are beginning to spread out into the suburbs and more rural areas, especially since many of us are now working from home. If you’re considering a move to the country, then have you looked into a USDA loan? Designed to help low- and middle-income buyers buy homes outside of cities, this type of loan could be a home run. Let’s take a closer look.
You don’t have to buy a farm
If you’re aware of USDA loans, then you may be under the misconception that it’s only for very rural homes and farms. But that isn’t actually the case. USDA loans can be used for homes outside of a city in an area with a population of up to 35,000. The USDA has a map on their website where you can check the eligibility of locations.
It’s not just for low-income buyers
Another misconception about USDA loans is that they are only for low-income buyers. While the USDA does provide direct housing loans for those with low incomes, they also provide guaranteed loans for those with higher incomes. In fact, they recently increased the income limits for borrowers to $90,300 for households that have up to four people. Households with five to eight people now have an income limit of $119,200.
You don’t have to be a first-time buyer
It’s not just first-time buyers that are eligible for USDA loans. The only stipulation is that you can only own one home at a time. So if you are selling your home, then you could qualify for a USDA loan on your next home purchase.
They’ve loosened the restrictions
Because of the pandemic, the USDA has made it easier to apply and qualify for a loan. Some borrowers may qualify to extend their certificate of eligibility, and the application has been streamlined and relaxed. Most borrowers will need a credit score of 640 or above.
You can get a great interest rate
One of the biggest perks of a USDA loan is that you can get a great interest rate. Even though interest rates for mortgages have hit historic lows, the rates for USDA loans are often even lower. In September, low-income borrowers could qualify for direct home loans with an interest rate of 2.5 percent.
They are inexpensive loans
One of the biggest challenges of buying a home is saving for the down payment. With a conventional home loan, you can be expected to pay as much as 20 percent – or more – for your down payment. With a USDA loan, you may qualify to pay nothing down and instead have the entire purchase price financed with the loan. Closing costs are usually lower, which can be a huge benefit for those who have been financially burdened because of the pandemic.
You must qualify
In order to get a USDA loan, you must meet certain requirements. To find out more about these types of loans, talk to your agent or visit the USDA website. If you’re considering a move to the suburbs or the country, then it’s definitely worth checking out this kind of loan.
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