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  • A mortgage loan backed by the United States Department of Agriculture (USDA)
  • Designed to promote home ownership in rural and semi-rural areas
  • Zero down payment required
  • Competitive interest rates
  • Lower mortgage insurance premiums compared to other loan types
  • Both new construction and existing homes are eligible
  • Can be used for purchasing & refinancing

Eligibility Requirements:

  • Must be a U.S. citizen or permanent resident
  • Property must be located in an eligible rural area as defined by USDA
  • Borrower must meet income requirements (usually low to moderate income)
  • Minimum credit score varies, but typically starting around 580
  • Stable employment history

Limitations:

  • 30 year Fixed-rate mortgage only
  • Geographic restrictions apply
  • Income limits based on the median income of the area
  • Not available for investment properties or vacation homes

Application Process:

  • Pre-qualification stage to assess eligibility
  • Submit application along with required documentation (e.g., proof of income, credit report)
  • Property appraisal to determine its market value and ensure it meets USDA standards
  • Underwriting process for final loan approval

Fees and Costs:

  • One-time upfront guarantee fee (can be rolled into the loan amount)
  • Monthly mortgage insurance premiums
  • Closing costs vary but may include appraisal fee, title search, and origination fee

Benefits:

No down payment required

Lower PMI (Private Mortgage Insurance) fees

Flexible credit guidelines

Can be combined with other grant programs for home buyers

Additional Points:

  • USDA Direct Loans are also available for very low-income applicants
  • Streamlined refinance options may be available for existing USDA loans
  • Always consult with a mortgage advisor to understand all options and obligations

Always consult with your loan officer to make sure you’re making the best decision for your specific circumstances.