How appealing is the idea of building your dream home out on a property with tens or hundreds of acres between you and the nearest neighbor? Some folks may love the amenities of the city, but if the quiet bliss of a more rural area appeals to you, we can help you find a way to make your dreams come to fruition. The USDA mortgage programs offer assistance for those who are looking to buy or build a home in certain rural areas.
USDA mortgage options are broken down into three subsets: guaranteed, direct, and rural repair and rehabilitation loans. They are intended to help those in lower income rural areas afford to buy a home, particularly where income may not have grown as high as housing costs. USDA mortgages often come with low or no down payment requirements. In addition, they have looser restrictions on credit score; generally, you can get approved for a USDA mortgage with a credit score of 640 or above. And, to add to the benefits, many USDA mortgages come with reduced mortgage insurance requirements in comparison to more traditional mortgage options.
Generally, all of the different USDA mortgage types have comparable eligibility requirements. First and foremost is the location of the property you are interested in purchasing. There is not set distance away from city limits; instead, properties must fall within the USDA’s home loan regional “footprint” to qualify. Second, eligibility is based on income — as is the case with many mortgage options. In regard to USDA mortgages, income eligibility is based on the median income in the area. For a guaranteed loan, the income can be up to 115 percent of the median income. For a direct loan, eligibility is generally under 50 percent of the median local income, and can go up to 80 percent, depending on other factors. Rural repair and rehabilitation loans are only intended for those who make 50 percent or less than the median area income.
Whether you’re ready to buy your first home or you’re interested in fixing up an old farmhouse, if that dream home is in a USDA-approved rural area, the USDA mortgage may be your best option for financing. The Patriot Home Mortgage team offers experienced help so we can find the right home loan option for you. Contact our team to learn more about USDA mortgages and other home financing options that may be right for you.