At Patriot Home Mortgage, our goal is to provide our clients with the best in home mortgage solutions. In order to do that, we want our clients to be well informed as to the many options which are available to them when purchasing a home. Conventional mortgages may be the solution for many, but that may not be the case for you. The last thing we want is for our clients to come up to us after they’ve already secured a loan asking “why didn’t you tell me about this option? It would have saved us thousands!”
In this post, we’re going to look at conventional mortgages and USDA loans and consider some of the advantages that each provides.
USDA (United States Department of Agriculture) loans are designed for those who are looking to buy a home in rural areas. The goal of these loans is to provide for those who live in rural areas who have a lower income. USDA loans have no down payment, you can qualify for one with credit scores as low as 640, and reduced mortgage insurance. A further benefit of USDA loans is they usually have some of the lowest interest rates you’ll find among the loan types.
Because of these unique advantages, there are also criteria that must be met before you qualify for a USDA loan. The one which is the biggest sticking point for many is the location. Properties have to be located within the USDA’s home loan regional “footprint” to qualify. You also cannot have an income that’s above 115 percent of the median income for the area. Finally, the house has to meet USDA exacting standards.
Conventional loans are the path most people take to home ownership. Their appeal lies in the fact that they usually have the lowest interest rates. Another big advantage has to do with the fact that you can remove mortgage insurance from your home without needing to refinance.
The downsides for many are the fact that you need a down payment — at least 5 percent — and have a decently low debt to income ratio. You also have a wide variety of lenders to choose from since banks are more eager to make them.
Patriot Home Mortgage is Here to Assist
We hope this introduction to the difference between the two types of home loans were helpful as you look for a new home.
Though you still have more questions about both types of loans that could not possibly be answered by a single online article. Or maybe you just find it easier to talk to a live person about your needs — we’re talking about buying your home after all, which is likely the biggest purchase you’ll ever make. Our goal is to find the right type of loan to meet the needs of your unique circumstances.
Please contact us today and one of our consultants will get back to you as soon as possible.