USDA loan with zero down payment benefit is a popular home loan for home buyers with no military service history. Affordable payment plans, low interest rates, 100 percent financing and low-credit eligibility criteria are a few reasons that make USDA home loans a better option than most of the other conventional loans. If you are looking for an easy way to buy a home, put USDA above the other available options. In this post, we cover five common questions that home buyers usually ask before obtaining a USDA loan.
Question 1: What is the qualification criteria for a USDA loan?
The location of the property is the most important qualification criteria. The applicant can obtain a loan for a house that is within the USDA-eligible geographic area. Borrowers making up to 115% of the median income of the area where they want to purchase a home are eligible for the USDA loan. A family of four, for instance, planning to buy a home in Los Angeles area has the annual income limit of $98,200.
Question 2: Is it necessary that the property should be in good condition for USDA loan approval?
The condition of the property is another vital qualification criteria, if you are applying for USDA loan. The property needs to meet the minimum standards to get loan approval. An appraiser inspects the condition of the property to states the same in the appraisal report. The qualification standards are almost the same as for FHA loan.
Question 3: Can I purchase a manufactured home with USDA loan?
The buyers in most cases qualify for a USDA loan if they are purchasing a new manufactured home. There are, however, a few scenarios where the lender might approve USDA home loans for a pre-existing manufactured house. If the current owner of the house already has USDA loan on the property, you might be able to get a nod from the lender.
Question 4: Is there any minimum credit score required for a USDA loan?
Applicants with a credit score of 660 or above usually have the highest chances of getting USDA grants. The score was set to a minimum 640 on December 1, 2014, but it did not affect most of the applicants as many lenders already had the minimum score set at the same level. Borrowers with no traditional credit history are also eligible for USDA loan, provided they show their rental history, insurance payments and utility payment records.
Question 5: What is the term of the USDA loan program?
A guaranteed loan (guaranteed by the third party) earlier had a fixed payment tenure of 30 years, and borrowers were given the option to reduce the tenure to 15 years in September 2014. Direct loan has two repayment options for 33 years and 38 years. If the income of the borrower is above 60 percent of the annual monthly income, the USDA approves a tenure of 33 years. A USDA loan for manufactured home has a loan term of 30 years.
Last Few Words
Backed by the United States Department of Agriculture, USDA loan has several benefits such as low interest rates and zero-percent financing, which make it a more affordable choice over traditional loan options. More than 166,000 families availed the benefits of USDA loan in 2015. Before you apply for a USDA loan in Texas or any other state, make sure to have a thorough understanding of all the eligibility criteria, pros and cons of USDA loans process and payment plans, which makes it easier to qualify for the approval.