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USDA Rural Development Home Loans
Are you looking to purchase a new Alabama home for sale in a rural area, but not sure where to begin when looking for help with a mortgage company? The U.S. Department of Agriculture (USDA) has a loan guarantee program that will help you obtain that special Alabama home for you and your family. The best news of all is that when you get a loan through the USDA Rural Development home loan program you may be living in your new home with little to no money down.
A USDA Rural Development home loan allows qualified borrowers a chance to obtain a home loan with easier qualifications and financing options that would not be offered with other conventional loans. Keep in mind though that USDA Rural Development does not fund the loans. USDA Rural Development has partnerships with lenders in all states that will loan the money with the guarantee from the USDA of repayment if the borrower should default on the loan. This will give lenders the confidence and ability to offer borrowers who qualify a home loan.
ARE YOU AN ELIGIBLE BORROWER?
Are you an individual or family planning on occupying an Alabama home located in a rural area as your primary residence? If this sounds like you, then you may have the ability to qualify for a USDA Rural Development home loan. Like with all Alabama Home Loans, if a borrower is applying for a USDA home loan then a lender will have to verify the borrower’s income is sufficient and research their credit history ensuring the borrower’s ability and willingness to repay prior obligations. A lender will also calculate a borrower’s monthly housing expense (mortgage principal and interest, property taxes and interest), these housing expenses must meet a specified percentage rate of his/her gross monthly income (29% ratio). As a borrower, your income ratio must be enough to pay your housing expense plus all additional monthly debt as well (41% ratio). A borrower’s credit background will also be looked at by a lender. Most lenders will require a FICO score of at least 620 to qualify for a USDA Rural Development home loan. USDA Rural Development does have income limits which will vary within the state and the states’ counties. If you are looking in a specific area within Alabama you will want to contact your lender to find out what that counties income limit is.
BENEFITS OF A USDA RURAL DEVELOPMENT HOME LOAN
1. The number one reason borrowers like to go with a USDA home loan is because hit is the only NO MONEY DOWN Alabama home loan program that doesn’t require the borrower to be a veteran. The borrower will not have to come out of pocket for the down payment. That means that the borrower is able to finance 100% of the loan.
2. The USDA home loan program has the lowest mortgage insurance compared to other conventional loans. This will give the borrower the opportunity to put more money down on the monthly mortgage payment instead of having to pay a higher Mortgage Insurance Premium monthly.
Interest rates for a 30 year fixed rate mortgage are always going to be competitive because the U.S. Government guarantees the loans.With this guarantee the lender is able to offer the lowest interest rates to qualified borrowers.
3. The USDA Rural Development program does not set a maximum purchase limit for borrowers. However, the lender will let the borrower know what is the maximum loan amount based on the borrower’s ability to repay the loan.
WHAT IS A RURAL AREA?
Most rural areas will fall in to the category of outside of city limits. However, there have been few exceptions of cities and towns being considered a rural area. Rural areas generally include county and places with population of $10,000 or less.
