Buying A Home Using The USDA Mortgage Program
USDA Mortgage Program loans are only serviced by direct lenders that meet federal guidelines. Loans are only made for homes purchased in rural areas. The loans are insured by the government for 100 percent of the mortgage amount. USDA Mortgages give people who may not qualify for a mortgage through conventional lending institutions because of income restrictions the ability to purchase a home with no money down.
The mortgages that are made through the approved lenders are guaranteed by the Housing and Communities Facilities Programs(HCFP). In the event a borrower defaults on their loan, the lender will be paid in full by HCFP. Individual borrowers or a family are allowed to borrow up to 100 percent of the appraised value of the home. This means the borrowers can get the home they seek without having to worry about a down payment. The USDA Mortgage Program makes it possible for many Americans who may not have been able to qualify for a mortgage because of a lack of funds to make a down payment to be able to become homeowners.
The qualifications for a USDA Mortgage to buy a home will not be applicable to everyone, but the program does offer a chance for a large percentage of Americans who may not qualify through conventional lenders a chance to become home owners. Those who exhibit a tendency to pay their bills on time and have a steady income that are looking to buy a home in a rural area will now be able to obtain a USDA mortgage. This opens the door for many low income and moderate income families and individuals to become homeowners.
Eligibility Requirements For The USDA Mortgage Program
- Applicants must have a dependable and adequate income
- Must be a U.S citizen, qualified alien, or legally admitted for permanent residence by the United States
- Adjusted annual income may not exceed the moderate income limit that has been established for the area in which the home is located. All adults in the household who have an income must be included in the total gross income of the household. Certain adjustments to gross income, such as child care costs, may be taken into account in order to meet the income qualification.
- Applicant must have a good credit history
- The mortgage payment plus tax and insurance must not exceed 29 percent of the gross monthly income
- Total debts must be lower than 41 percent of the gross monthly income
USDA Mortgage loans can be made on existing or new properties, and there are no restrictions on the design or size of the house being financed. Existing homes must be in good condition, have adequate functionality, and be structurally sound. Homes must be located in a rural area and may not be used as an income producing property. Mortgages are 30 year fixed rate loans given at market interest rates.
While it may be easy for people who are financially well off to qualify for buying a home, there are others who work hard for less money who should also be given the opportunity to become a homeowner. The USDA Mortgage Program gives these low to moderate income people a chance to achieve their dream of owning a home even though they may not qualify for financing through a more traditional mortgage lender.
Rob K. Blake, home loan expert and author, educates mortgage shoppers on finding local providers by state like Wisconsin Mortgage Brokers and Lenders and provides reviews of national companies like Accredited Home Lenders.
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