BUYING A HOUSE IN A RURAL AREA? A USDA LOAN CAN HELP.
If you’re looking to buy a home in a more rural part of Louisiana, then you might want to consider a USDA loan. Designed to spur home purchases in less populated areas of the country, USDA mortgages offer significant perks for buyers, including no down payment requirements and low interest rates.
Here at Essential Mortgage, we’re proud to offer USDA loans as one of our various mortgage options. If you’re interested in using one of these loans to purchase your home, reach out to us or read more below.
WHAT IS A USDA LOAN?
A USDA loan, sometimes referred to as a “rural” mortgage loan, is a mortgage that’s guaranteed by the Department of Agriculture. The goal of these loans is to boost homeownership is less developed parts of the country.
USDA loans are only available on homes purchased in certain designated areas. To see if a property you’re considering would qualify, check the eligibility map at USDA.gov now.
WHO SHOULD USE USDA LOANS?
USDA mortgage loans are best suited for homebuyers with low to moderate household incomes. They’re also a good option for first-time homebuyers, buyers who need low, up-front costs, and those who prefer to live in more remote and rural areas.
QUALIFYING FOR A USDA LOAN
The first step to using a USDA loan is to ensure the property you’re buying is located in an eligible part of the U.S. It will also need to be your primary residence. USDA loans can’t be used on vacation homes or investment properties.
As a borrower, you’ll also need to meet a number of other requirements in order to qualify for your loan. In most cases, mortgage companies require at least a 620 credit score. You’ll also need to fall within the USDA’s income limits. Because the loans are designed for lower and middle-income earners, you won’t qualify if you make more than 115 percent of your county’s median income. Use this tool to see if your income would qualify you.
THE PROS AND CONS OF USDA LOANS
USDA loans offer a number of benefits for Louisiana homebuyers. For one, they require no down payment whatsoever. They also allow you to roll your closing costs into your loan balance, significantly lowering the up-front costs of buying a home.
If you have loved ones who’d like to contribute to your home purchase, USDA loans can also be helpful, as there are no limits on cash contributions and no penalties for prepayment.
On the downside, they can only be used in certain geographic areas. USDA loans also require private mortgage insurance. Though the premiums for this insurance are lower than on FHA loans, they still mean an added up-front and monthly fee.
Pros:
- No down payment is required
- Can roll your closing costs into the loan
- Private mortgage insurance premiums are lower than other options
- No penalties for prepaying
- No limits on gifts/contributions
Cons:
- Can only be used in certain areas of the country
- Can only be used on primary residences
- There are income limits
- Most mortgage lenders require at least a 620 credit score (sometimes higher)
- Requires private mortgage insurance
SHOULD YOU USE A USDA LOAN?
Are you considering buying a home in a rural part of Louisiana? Then a USDA loan could be the right choice. Want to learn more about USDA loans or see if your home purchase qualifies? Then reach out to Essential Mortgage today. We’re here to guide the way.