How to Move to a Village With a USDA Mortgage
None of us expected this year, and despite the coronavirus, isolation, social unrest, and natural disasters, many Americans have been inspired to relocate, and an increasing number of Americans are eager to leave the big cities . You may run into some hidden costs as you leave the city, but if you have the privilege of working remotely and have the funds to relocate – you may be looking for a quieter, slower lifestyle in rural America – you are not alone. House searches in rural areas rose 15% in May, according to a recent report from a real estate agency .
With low interest rates, you might also want to buy a home. But if you’re struggling to save enough for a down payment, there may be an option you didn’t consider: USDA mortgages. Here’s what you need to know about these loans.
Benefits of USDA Home Loan
The United States Department of Agriculture (USDA) provides lenders with financing for mortgage loans in rural communities. The purpose of these loans is to help home buyers who might not otherwise qualify for a traditional mortgage. One of the biggest advantages of USDA home loans is that there is no down payment. Another advantage is lower interest rates. Although 30-year mortgage rates hover below 3% , USDA rates could be even lower. You can also pay less to close your mortgage. The USDA also offers loans and grants to low-income homeowners, including seniors, for home improvements or health and safety hazards.
How to Get a USDA Home Loan
The downside of USDA home loans is strict eligibility criteria. The home should be your primary residence in a suitable area . There are also income limits based on location and the size of your household. You can check your household’s eligibility with this eligibility calculator .
To qualify for a direct home loan or a guaranteed home loan , you can be a US citizen or permanent resident with a green card. The mortgage payment (principal, interest, taxes and insurance) must be 29% or less of the monthly income, according to NerdWallet . You will also need proof of reliable income for at least 24 months, and applicants with a credit rating of 640 or more may be more likely to qualify. But as the Realtor reports , some parts of the app have been weakened due to COVID-19 . You can read more about the USDA underwriting criteria here .