5 Key Benefits of USDA Loans Over Conventional Loans

One of the reasons USDA loans are gaining popularity over conventional loans is that they offer several benefits to borrowers that conventional loans don’t. USDA loans came into existence during the Great Depression when the American economy was going through turbulent times. The purpose of these loans was to provide financial help to individuals and families with low and moderate incomes and help them buy dwellings of their own.  The loans have evolved a lot since then and there are more than a few benefits that they offer to borrowers. In this blog post, we discuss five key benefits of obtaining a USDA loan.

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1. Zero Down-payment

One of the most popular benefits of Texas USDA home loans is that borrowers are not required to make any down-payment. Conventional loan borrowers, on the other hand, are required to pay anywhere between 3.5 to 5 percent as down-payment fee.

2. Zero PMI

Conventional loan borrowers are required to pay a monthly private mortgage insurance (PMI) fee if they put anything less than 20 percent as down payment. As USDA loans require no down payment, they don’t require borrowers to pay a PMI.

3. Easy to Obtain Credit Qualification Criteria

The credit qualification criteria for obtaining USDA loans is far more lenient than that required when applying for a conventional loan. The credit score requirement is 640 for USDA loans. If the applicant’s score is less than 640, they can still apply for a manually underwritten loan.

4. Low Interest Rates

As the USDA home loans in Texas are backed by the US Department of Agriculture, lenders offer them at rates that are comparatively lower than conventional loan rates. The other interest rate benefit that USDA loans offer is that the rates do not vary with the applicant’s credit score, as they do in the case of conventional loans.

5. Closing Costs Benefits

Conventional loans have a closing cost that varies between two to five percent. This is an additional burden for borrowers. USDA loans, however, allow borrowers to roll the closing costs into the loan amount, thereby allowing borrowers to avoid an upfront fee.


Now that you are aware of the benefits that USDA home loans in Texas offer, there is no reason you should not apply when looking for a home loan. To learn more about the pros and cons of USDA loans or initiate the process of applying for a USDA home loan, get in touch with a USDA home loan expert and they will guide you and expedite your home loan application process.


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