USDA mortgage loans are available for home financing in rural areas. The United States Department of Agriculture designed this program to assist offer affordable financing for homes in small towns.
In most cases the USDA guarantees the rural development loan and another lender actually makes the loan. The terms are really favorable compared to other types of mortgages. The main advantages include a really low finance rate 100% financing, the seller is allowed to pay your closing costs, there is no PMI insurance, and credit requirements are less strict than most other programs. There is not a maximum mortgage size but your total mortgage payment should not be more than 29% to 31% of your gross income. (In some cases exceptions could be made for the dept to income ratios.)
Some of the requirements to qualify include, US citizen, a home in a qualified area, reasonably good credit (or no credit), sufficient dependable income that is within the program limit, and not currently owning a home in the area. Other conditions apply but you would probably qualify if you meet the above conditions.
If you qualify for the USDA rural development (RD) program it would probably be your best option unless you would put 15% or more for a down payment. If your credit is really good and you wish to make a large down payment a conventional mortgage would probably be better. If you prefer to go with a small down payment but do not qualify for the RD program because the home is not in a rural area, or if your income is too high, a FHA mortgage could be an option.
For more information consult with a lender that has a variety of loan programs available. Texas residents could visit my website at Texas-Rural-Mortgage.com or call my Houston office at 281-537-7800.
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