How to Obtain USDA Home Loans
Each Section 502 loan has different eligibility restrictions.
The following are the application requirements for direct loans:
- Must lack adequate, safe, and sanitary housing.
- Must be unable to obtain a loan with reasonable terms from other lenders.
- They must live on the property as their primary residence.
- Must be legally capable of taking out a loan
- Must meet income eligibility limits based on where they live
- Must be a citizen or eligible non-citizen
- Cannot be suspended or prohibited from participating in government programs..
Property requirements include:
- It must be located in a rural area with less than 35,000 people.
- It must be smaller than 2,000 square feet.
- The property’s market value must be less than the applicable area loan limit.
- An in-ground swimming pool is not permitted on the site.
- The property cannot be designed to generate money.
The applicant for a guaranteed loan must meet the income standards, agree to use the home as their principal residence, and be a U.S. citizen, a U.S. noncitizen national, or a qualified alien. The property must be located in a rural region that qualifies.
USDA Home Loan Interest Rates
USDA home loans require qualified borrowers to choose a fixed-rate loan with a repayment duration of 15 or 30 years. The lender will determine the interest rate depending on characteristics such as credit score, employment history, and financial status.
If you intend to obtain a USDA loan, keep in mind that you will incur some closing expenses, even if you are not required to make a down payment.
Closing costs are fees associated with the completion of a mortgage.
The amount you must pay varies by area, but it is typically between 1% and 3% of the loan amount.
