USDA Loans
During this writing, we are going to talk about USDA Loans. By the end of this blog, you will know what a USDIn this A Loan is, what the necessary requirements are to obtain a USDA Loan, and how to apply for one.
What is a USDA Loan?
A USDA Loan is a type of Mortgage that is used in rural areas. A USDA Loan is also known as the USDA Rural Development Guaranteed Housing Loan Program. Being used in rural areas, the USDA Loan is offered by the United States Department of Agriculture and Rural Development. A government-funded loan, there are many advantages of a USDA Loan. First and foremost the USDA Loan is guaranteed against default, which gives lenders the ability to broaden their guidelines and take more risk with clients who may not qualify otherwise and still offer them favorable terms. Another advantage of the USDA Loan is they allow you to finance one hundred percent of the loan without putting any money down! When comparing that to your more common FHA Loan which requires a three and a half percent down payment and Conventional Loans which can require anywhere from five to twenty percent down payment, that could be considerable savings! Another great advantage of USDA Loans is the competitive interest rates. Since the loan is guaranteed by the USDA, lendUSDA Loans
ers are able to offer eligible clients rates that are typically lower than any other on the market. We have already established savings of down payment and interest rates, but we are not done there! A qualified USDA Loan is also eligible for lower monthly mortgage insurance. When compared to the FHA Loan and Conventional Loan a USDA Loan does NOT require PMI insurance or high annual mortgage insurance costs. Instead, USDA Loans require two fees. One of the fees is known as an “upfront guarantee fee” which is paid after closing and the other is an annual fee which is spread out in your monthly mortgage payment. The upfront guarantee fee is 1% of the total loan amount and the annual fee of .35 percent of your mortgage’s current balance. Talk about savings, let’s not stop there! When comparing alternate loan products the USDA Loan has the lowest funding fee of all the other options. If you are eligible for a USDA Loan, use it to your advantage and save! What’s the old saying? “ A dollar saved is a dollar earned”, with a USDA Loan there is no better way to view it!
How to be eligible for a USDA LOAN
In this section, let’s discuss how to be eligible for a USDA Loan. There is a household income requirement to qualify for a USDA Loan. The income requirement for a USDA Loan is set by the USDA based on the area where you are looking to purchase your home. You can check on your area by going to the USDA website. When searching for the minimum credit score to be eligible for a USDA Loan, you will find multiple opinions. Some lenders will tell you that you have to have a minimum score of 640 to qualify for a USDA Loan, but that is not the case. There are lenders who can help you obtain a USDA Loan with a score lower than that by using manual underwriting guidelines. Finally, as previously stated, to be eligible for a USDA Loan, the property must be in a rural area that is approved by the USDA. Again by visiting the USDA website, you can check a certain property address to see if it is eligible prior to apply for the loan.
How To Apply For USDA Loans
A USDA Loan is no different than other mortgage products when it comes to applying. When you are in the market to purchase a home, there is a suggested process in which to follow. First and foremost, do your research. Once you know what type of home you are looking for, have a budget prepared to determine a comfortable monthly mortgage payment, and are ready to start house hunting, it is imperative to reach out to a lender for pre-approval. There is no point in looking at houses and working with a realtor and investing precious time, only to be let down once you find “your” home.
By getting pre-approved, you will have the power in knowing what guidelines you need to follow and this will allow you to shop freely and enjoy the experience. There are multiple lenders looking to help you with this process. The important thing to remember is to find the best lender to fit your needs. Once that relationship is established, you then can find a real estate professional, again keeping in mind to choose someone who is a good match for your personality and who is willing to spend the time needed to help you achieve your goal of home ownership. The staff at Non-QM Mortgage Brokers is licensed in 48 states and has over 190 investors, making them a very attractive option for homebuyers nationwide.
Are USDA Loans Available In Nevada?
As I previously mentioned in this blog, USDA loans are ONLY available in rural areas. However, there are certain parts of Nevada that would be eligible for USDA Loans. The most popular area for USDA eligibility in Nevada in Pahrump. Pahrump is a rural city located 80 miles west of Las Vegas. Known for outdoor activities such as hiking, ATV riding, and the many outdoor festivals offered, Pahrump is becoming a popular destination for people to relocate. The average home price in Pahrump is estimated at $392,623 according to Zillow which has increased by 1% over last year. That value is roughly less than $57,000 compared to the Las Vegas area from data collected in September of 2022.