Getting a Low-Interest USDA Home Loan

The Rural Housing Service of the United States Department of Agriculture (USDA) offers home loans that come with low-interest rates to families with low incomes. Unfortunately, many people do not know about these loans, and even those who know, do not opt for them.

A USDA Home Loan is particularly designed to help families with low-to-moderate incomes to finance their home purchase and help fulfill their dreams of having a place they can call their own. The amazing features of USDA Home Loans make people that know about these loans stick with them. Unlike conventional mortgage loans, USDA Home Loans are flexible and very cheap, with interest rate as low as 1 percent. As you would have figured out by now, you can only get this loan if you fall under the low-income earning category. However, persons with higher incomes can also get mortgage loans with relatively low-interest rates.

In addition to being a low-income earner, it is also required that the house you intend to purchase or property is located in a rural area as classified by the USDA. It is worth noting that living in a rural area does not necessarily translate to living in the sticks. Some persons have been lucky to get home loans in the likes of Idaho and Post Falls with a population as much as 30,000 and just 30 minutes from some major cities.

Other benefits that accrue to persons that opt for this loan option include the maximum age of the houses being 10 years, and the possibility of financing land and home packages with brand-new homes and lands of up to five acres. The USDA will scrutinize the house and property before approving the loan to ensure that they meet the required standard and codes.

Steps to take to qualify for a USDA Home Loan

Below are the steps required to take to qualify for a USDA Home Loan:

    • The first is to go to the USDA income and property eligibility site. There you will see if the property or house you intend to buy falls under the category of ‘rural’ or located inside the USDA eligible area map and if your income qualifies for this type of loan.
    • Once you have identified that the location of the house and your income are eligible, the next step is to find the USDA authorized lender near you. Not all mortgage lenders offer the USDA Guaranteed Home Loan program. You will need to apply for a home loan with the USDA approved lender to ‘prequalify.’ They will take your application and start the prequalification process.
    • It is important to note that when you apply for a USDA home loan, you count all income generated by your household. Anybody in the household that works and generate any of income must be counted.
    • The rest of the USDA Home Loan process works like every other home loan. The USDA loan expert working with you will guide you through every step of the way. It is required that you provide the required documentation such as proof of income, your assets and in some instances, the source of funds to close on the loan. You can also be set up for down payment assistance if needed.
    • Once it has been ascertained that you are qualified for the loan, the next step will be to find a property. The United States Department of Agriculture – Rural Development fund loans for acreage of up to five acres and manufactured home packages. It is however required that the manufactured homes are brand new and if you want to buy stick-built homes, they should be less than 10 years old.

There is no need to wait any longer for persons who want to own a home, even if you do not have the funds readily available since a USDA loan ensures you can live your dream even with little income. The loans offered by USDA-RHS are great for not only low-income earners but also for people with moderate income. Nevertheless, income is a big factor in determining your eligibility for the USDA home loan program.

To learn more about USDA home loans, contact our USDA Loan Specialists, read more about USDA loans here, or use the tools on this site.