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What are the Benefits of a USDA Rural Home Loan?

March 7th, 2014 by Sean Stephens

What Benefits Do USDA Rural Home Loans Offer?

USDA Rural Home Loans are a sought after program by consumers, so it is important for Realtors and homebuyers to understand the facts about this unique and valuable program.

USDA Rural Home Loan Benefits

  • 100% Financing.  USDA loans offer no down payment, which when compared to FHA or Conventional programs, offers an immediate reduction in out of pocket expenses.

In addition to saving money with no down payment, USDA loans offer the ability to finance out of pocket settlement charges.  In cases when the appraised value is higher than the sales price, USDA loans will provide this added flexibility and allow homebuyers the option of financing these expenses.

FHA, Conventional, and VA loans will not permit the financing of these costs.

  • No maximum loan limits. Mortgage amounts are determined by loan qualifying, thus not restricting qualified applicants by setting loan limits like FHA or Conventional.
  • Flexible credit qualifying.  While minimum credit conditions are required, exceptions can be made for previous short sales, bankruptcies, and foreclosures. Manual underwriting can also be used for lower score scenarios, but be cautious because not all lenders offer this option.
  • USDA loans are not restricted to only First Time Homebuyers.  While many assume that only first time homebuyers can be eligible, previous homeowners are also possible candidates provided they are purchasing a primary residence and meet the qualifying criteria.

With all of the above mentioned benefits, please note that there are two main requirements needed before additional eligibility can be reviewed.

  • The subject property being purchased must be located in an approved USDA Rural Development area:  There are no exceptions to this policy.  Eligible areas can vary per county, so be aware when planning to look for homes.

USDA Benefits

  • There are income limitations based on family household size: USDA loans take into account income from all family household members, and not just who is on the loan.  This can be complicated, so contact us for any specific questions.

USDA eligible areas and income limits can be found directly at the USDA website.

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