USDA Home Loans: Affordable Home Financing
(Not just for farmers anymore)
If you are looking for a home in a suburban small town, or on the edge of town, a USDA home loan might be the right choice for you. USDA Rural
Development loans encourage growth in small communities — generally a town with a population of less than 20,000. Many small towns and suburban locations fit this definition.
USDA loans are more affordable because they require no down payment, and no monthly mortgage insurance. Aside from a VA loan (which is for US active duty military and Veterans only), it remains the last real no-money-down loan.
To qualify for a USDA loan:
- Your home must be in a USDA designated area (your Bjornson Team member will be happy to look up the address for you, to make sure).
- You must not exceed the income limit set for that area. (Again, we can tell you what that is once we know the location of the home you want to buy.)
- Yourmust have a credit score of at least620 andbe able to“demonstrate a willingness and ability to repay your loan”. (For example, if your credit history shows no late payments in the last twelve months, this can serve as a demonstration of your willingness and ability to repay.)
- Verification of your income for the previous two years is also required.
(If you are worried you may not be able to proveyour ability to repay, call the Bjornson Team at 360-676-9600. We may still be able to help you.)
USDA Rural Development Loan Program Benefits:
- No Down Payment. There is no down payment required for a USDA home loan. The home’s full appraisal value, plus the one-time funding fee, can be paid for through the USDA Rural Development Loan.
What that means for you: Except for your earnest money fee to purchase the home (typically between $500 – 1000), you do not have to pay anything out-of-pocket when borrowing with aUSDA home loan.
- A Competitive Fixed Rate. USDA loans offer a competitive fixed rate. In fact, the USDA rural housing program does not offer adjustable rate mortgages of any kind.
What that means for you:Your monthly mortgage payments will never increase with a USDA home loan (except for variations in property taxes).
- No repeating fees.The only fee associated with the USDA Rural Development Loan is a small, one-time funding fee. This fee is financed into the loan, so you are not required to pay the fee out of pocket.
- Monthly Mortgage Insurance. You pay a low monthly mortgage insurance with a USDA home loan.
What that means for you: The USDA housing loan allows you to put more money towards paying off your mortgage each month, rather than towards fees.
- Maximum seller concessions. Seller or other interested party contributions towards closing costs in excess of six percentage points are prohibited.
What that means for you:You may not have to pay any closing costs out of your pocket, saving you even more money.
