USDA home loans are for buyers with low income who are purchasing homes in designated USDA rural or suburban areas. Though most of the US landmass is rural, over 80 percent of the population lives in urban areas that are not designated as rural. The advantages of a USDA home loan include flexible credit score requirements and low down payment. The disadvantage is an up-front fee that can make qualifying for the loan difficult. But with proper information, you can make the best choice for your situation. 주택담보대출
Low down payment
If you’re interested in obtaining a USDA home loan, you may be wondering if your credit score is low enough to qualify for one. The truth is that a USDA home loan is not available to everyone, and some lenders have specific requirements for USDA loans. The eligibility map will tell you if your home is located within an area that qualifies. It is also helpful to look at your employment history and debt-to-income ratio.
While USDA loans are considered no-down-payment loans, they do come with an annual guarantee fee and upfront guarantee fee. The first is 1 percent of the total loan amount and can be rolled into your mortgage. The second is 0.35 percent of the total loan amount. That means that a $100,000 mortgage would require a $1,000 one-time guarantee fee and $350 per year in fees. Even though these fees may seem like a lot, they’re not prohibitive.
Flexible credit score requirements
If you’re looking for a low-interest mortgage with flexible credit score requirements, you might want to consider applying for a USDA home loan. This type of loan is guaranteed by the USDA and geared toward low to middle-income families. The 30-year term allows you to make payments on the loan at a fixed rate, and eligible homes include single-family, multi-family, manufactured home, and condominiums. You must not intend to use the loan for investment purposes.
The USDA has flexible credit score requirements, but you may have to go through manual underwriting to qualify for a USDA home loan. This process requires a review of your financial records, including payment history on utilities and rent. While manual underwriting takes longer, it can result in a loan denial. To avoid this, try to improve your credit score. In general, you must have a credit score of 640 or higher to qualify for a USDA mortgage.
Up-front fee
A USDA home loan requires little or no down payment, but you must occupy the property as your primary residence. You must also meet income and property eligibility requirements. If you have damaged credit or are a U.S. non-citizen, a USDA loan may be right for you. You can also apply for a loan through the Federal Housing Authority. However, there is a USDA home loan up-front fee.
The guarantee fee comes in two forms: a one-time up-front fee of 1% of the loan amount, and an annual 0.35% fee that is included in your mortgage payments. Most buyers choose to incorporate this fee into their loan amount, but the amount of the final loan must still exceed the appraised value. If you plan to pay the guarantee fee on a future mortgage, it’s better to know how much you will owe in advance so you don’t get caught off guard.