USDA Home Loan Texas – Zero Down Payment Financing

USDA home loans are part of the USDA Rural Development Guaranteed Housing Loan Program guaranteed by the U.S Department of Agriculture. The loan is available to buyers looking to invest in property located in a qualified rural area of Texas. The best part of the USDA loan program is that it is available to home buyers with below-average credit scores, with the option of zero-down-payment and low interest rate, as compared to conventional loans available on the market. This brief read gives you a 360 degree view of the USDA home loan program to help you make an informed decision. So let’s begin.

home loans

100 Percent Financing for Non-city Dwellers

Homebuyers looking for 100 percent financing have two loan options – VA loan from the Department of Veterans Affairs (available to qualified veterans nationwide) or the USDA loan (also known as Rural Housing Loan/ Section 502 loan).  Originally designed to help rural Americans buy homes, today the USDA loan program is available for a wide range of qualified suburban neighborhoods across the U.S. Homebuyers interested in homes in qualified USDA areas must meet USDA income eligibility requirements.

USDA Loan Benefits

Unlike conventional loans, USDA home loans offer low monthly private mortgage insurance premiums( two percent of the total loan amount). The insurance fee is added to the loan amount at the time of closing the same as costs of repairs and improvements. Due to a repayment guarantee from the USDA Rural Development Office, lenders have confidence in borrowers and are willing to provide attractive loan terms to qualified borrowers. Other benefits of the program include:

  • Competitive 30-year fixed Interest Rates
  • Flexible credit guidelines
  • No maximum purchase price
  • Ability to finance upfront PMI

Furthermore, as there is no particular loan limit, home buyers can borrow more money with a USDA mortgage, contrary to other conventional VA and FHA loans.

Know your Eligibility Status

As with any type of home loan, borrowers planning to finance with USDA must meet the set eligibility criteria to qualify for the loan, such as income, property, credit, and area. Some of the qualifying criteria set out by USDA include:

  • The buyer must buy a home in a USDA-eligible area.
  • The household income may not exceed 115% of the area’s median income.
  • The property must serve as a primary residence to the borrower.
  • Buyers are eligible to apply for the loan after two years of claiming bankruptcy.
  • The buyer must have a decent credit score

In addition, the buyer must not own any other property in close proximity of the new property.

The Bottom Line

The USDA loan program allows low-income group people to realize their dream of homeownership by availing zero down payment and low interest rates, as compared to other conventional home loans. Nevertheless, before making a final decision, it is important to consult a loan expert who can guide you through the borrowing process. A mortgage lender can tell you whether you meet the program requirements, and if not, they can suggest a better alternative.

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