The Advantages of USDA and VA Home Loans for Qualified Borrowers

USDA Home Loan ProgramThe U.S government provides different types of home loans to people with specific eligibility. Low income rural populations and military veterans are a couple of examples of eligible types of borrowers. The U.S Department of Agriculture and Department of Veteran Affairs offers mortgages to qualified borrowers that provide several benefits. If you qualify for this mortgage, it’s important to know the details on this government-aided loan before applying.

USDA Home Loan Advantages
As mentioned above, the USDA offers a unique home loan program that is available to people living in areas that are recognized by the department as “rural”. The other two important criteria that a borrower needs to fulfill are:

1. Having a minimum credit score of 620
2. Not exceeding the median income threshold of 115 percent considering the median income of specific areas.

Apart from VA loans, the USDA is the only other home loan assistance program that allows borrowers to buy a home with no down payment. They aren’t required to pay a mortgage insurance premium, as the loans are offered by the FHA (Federal Housing Administration). Even the 2 percent guarantee fee charged by the USDA on the purchase price of the loan can be financed.

If you are a veteran living in rural areas of any state, for example Texas, you will need to decide between VA and USDA home loans. Both USDA home loans in Texas as well as VA loans come with great advantages.

VA Home Loan Advantages
For veterans living in non-rural areas, the VA home loan is the only home loan available that offers benefits comparable to that of a USDA loan. Starting from $417,000, veterans can qualify for a VA loan in amounts up to $1 million. There’s no down payment or mortgage insurance payment, just like with a USDA loan.

A credit score of 620 is mandatory for a VA loan borrower to qualify. Other than the advantages discussed above, several concessions are also provided. The concessions on a VA home loan are on the closing costs associated with it. VA lenders charge 1 percent origination fee in order to cover the costs associated with processing, underwriting etc.

A VA borrower might ask the seller to pay closing costs, which they can negotiate themselves. Other than this, VA borrowers can also ask for various concessions from the seller.


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