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The Lowdown on USDA Loans...

USDA Loans

If you want to buy, repair, or renovate a home in a rural area, you might be eligible for a USDA loan. The United States Department of Agriculture backs these loans, which give moderate- and low-income people the opportunity to secure mortgages.

In addition, unlike other types of mortgage loans out there, you don’t have to put any money down with a USDA loan. You are eligible for up to 100 percent financing with these loans, so you don’t have to scrounge up your down payment before moving forward.

If you’re considering a USDA loan, you probably have a lot of questions. Let’s begin by determining if you qualify for a loan. Then, you’ll know if you should move forward with a USDA loan.

Do You Qualify?

If you want to secure a USDA mortgage, you have to meet certain requirements. Lenders use these requirements to weed out the applications and give money to the right people.

In order to qualify, you must:

  • Choose a property located in an eligible rural area, there are many eligible areas in California.
  • Have an income that doesn’t exceed 115 percent of the median income for your rural location.
  • Possess a decent credit history.
  • Be able to pay back the loan.
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Now that you know if you meet the general requirements, you need to know which loan you qualify for. The USDA backs four different types of loans. Each loan has its own set of requirements.

Single Family Direct Homeownership USDA Loan

If you are a low-income family, consider applying for the Single Family Direct Homeownership USDA loan. There are various eligibility requirements you need to pass to be approved for this loan.

First, you need to make less than 80 percent of the median income for your area. At these same time, you need to be able to afford the payments once your mortgage is granted. If you aren’t sure what you can afford, use the USDA loan calculator to calculate your payments. If you aren’t able to make the payments, you might be eligible for temporary subsidies. These subsidies will help you pay for your mortgage. Your lender will help you determine if you are eligible for subsidies, and if so, how much you can get.

You also need to be without adequate housing to qualify for this loan and unable to secure a loan from another lender. In addition, you need to choose a home that doesn’t exceed the area’s market value. The size and design also can’t exceed what is normal for the area. In other words, you can’t use this loan to get a home that is twice as big and worth twice as much as other homes in the area. Your home needs to fit in. It shouldn’t stand out because it is worth so much more than the other homes in the area.

Get a Quote for a Single Family Direct Homeownership USDA Loan

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Single Family Guaranteed Housing USDA Loan

USDA guaranteed loans were created for moderate-income households. This loan meets the maximum income requirements, meaning that your income can’t be more than 115 percent of the area’s median income.

The lender will also look at your ability to repay the mortgage, as well as your credit history. USDA guaranteed loan rates vary from lender to lender, which is why it is a good idea to choose a company that can offer you the best rates for your California area property.

Rural Repair and Rehabilitation USDA Loans

If your home needs to be repaired or improved, you might be able to get a Rural Repair and Rehabilitation USDA loan. These loans are available for low-income households. You have to make less than 50 percent of the area’s median income to qualify. In addition, you need to be ineligible for affordable credit through another program or lender.

If you meet these requirements and you are at least 62 years of age, you might be able to secure funding. If so, you can borrow up to $20,000. You will need to repay the loan within 20 years, and you will have 1 percent interest rate.

Grants for up to $7,500 are also available. If you need extra money, consider applying for both a loan and a grant. Grants don’t have to be paid back, so they are a great way to repair your home without swimming in debt.

Mutual Self-Help USDA Loans

If you live in a low-income household and you can’t buy a clean and safe home, consider applying for a Mutual Self-Help USDA loan. You will need to make less than 80 percent of the mean income for the area. In addition, you can’t be eligible for credit from another lender and you need to be lacking adequate housing.

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You can take this loan out for 38 years, although shorter terms are available for those who meet the income requirements. This also has one of the best USDA loan rates, with interest rates as low as 1 percent. Because of that, the majority of your payments will go toward the principle instead of interest. That makes this a very attractive option for borrowers.

Benefits of USDA Loans

If you’re still on the fence about getting a USDA loan, you need to check out the benefits. These benefits will help you decide if this loan is a good choice for you.

Benefits include:

  • Up to 100 percent financing available
  • Fixed interest rates
  • Financing available for closing costs
  • Sellers can pay the closing costs
  • No down payment

Get Help to Determine Which USDA Option Is Right for You

With so many benefits, you might want to jump onboard and get a USDA loan. Of course, these loans come with a lot of options and guidelines, so you might need some help. Wherever in California you might be, POP Mortgage is here to help.

Let us work with you every step of the way so you can secure your mortgage and get the best rate. Start by seeing if you qualify for a USDA loan. Then, let us get to work for you.

Why a USDA Loan?

There are many benefits, including: no down payment required; borrowers who qualify for a USDA Rural Development home loan have the flexibility to pay nothing out of pocket for a down payment. Additionally, the USDA Loan allows borrowers to use a gift or grant to go toward their mortgage.

  • Fixed Rates
  • Adjustable Rates (ARM)
  • Low Mortgage Insurance
  • No Loan Limits
  • Terms from 5 to 30 Years

Get Your FREE USDA Loan Quote Now!

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