Under the USDA Home Loan Program, it is now a lot easier for virtually anyone to purchase a home. Compared to conventional housing loans including other federal agencies that provide home loan assistance, USDA Home Loans can provide a number of benefits that other programs can only dream of having.
Zero Down
The lowest possible down payment that you can get from other providers of home loans is 3 percent. This means you will still have to prepare this amount before you can have the house that you want to purchase. The Federal Housing Agency requires 3.5%. On the other hand, the USDA Home Loan program can offer eligible homebuyers zero-down payment schemes so you can start saving more for your first monthly mortgage repayments rather than having to come up with the sum to pay for the down. Its the same with VA loans.
Competitive Mortgage Rates
While it is not the USDA that will directly finance your home but rather accredited lenders, the guarantee afforded by the federal agency is enough motivation for lenders to provide you with more competitive interest rates. Of course, the mortgage rates can vary from one financing institution to the next, typically depending on a number of factors. But, given the fact that the USDA guarantees it, then these lenders can offer you lower rates.
Low Mortgage Insurance
Borrowers through the USDA Home Loan program will only pay 0.35% for mortgage insurance every year. By comparison, the FHA charges its borrowers with 0.85% annually. A few conventional lenders can give you an annual mortgage insurance rate of about 0.2%, although majority pegs it at 1.5%. When you take a loan via the USDA program, you may only be paying $58 monthly for the insurance whereas the FHA will amount to a monthly of $139.
Flexible Credit Guidelines
All lending institutions will look at your credit score. And while this is also observed by the USDA Home Loan Program, they are a lot friendlier than most. Other lenders will require you to have a minimum of 660 for your credit score. This often comes with higher interest rates. If you wish to get lower interest rates, then your credit score should be at least 720. On the other hand, the USDA program will not really look at your credit score. However, if you have a credit score of at least 640, then this will qualify you for the programs automated underwriting system. In other words, you get approved a lot faster.
These are just some of the benefits of getting a USDA Home Loan. There are plenty more.