Have you ever wondered what the difference is between the various mortgage loan types? Or were you unaware that there are many different types of loans meant to address specific borrower needs? Just as no two borrowers are exactly alike, no two loan programs are set up precisely the same way.
One common loan type is the USDA loan.
What is a USDA loan?
A USDA loan is a type of mortgage loan secured by the United States Department of Agriculture. While there are some exceptions, most properties eligible for USDA financing are located in rural areas of the country. Fixed rate USDA loans are available for purchasing, refinancing, building or renovating such eligible properties. With as little as no down payment required, these loans may provide an affordable financing solution for lower-income buyers in eligible areas.
USDA Guidelines and Requirements
As with any loan product, there are a variety of requirements that must be met to qualify for a USDA loan, including:
- Area eligibility – In order to qualify for a USDA loan, the subject property must be located in what the USDA defines as an eligible rural area. To see if a property is in an eligible area, visit the USDA website.
- Income restrictions – While there is not necessarily a maximum loan amount for USDA loans, income limits do apply. Visit the USDA website to view income limits.
- Fees – There are fees associated with guaranteeing a USDA loan. However, they are typically quite a bit less than what you would expect to pay for mortgage insurance on a comparable Conventional or FHA
- Occupancy – the property financed must be used as an owner-occupied primary residence. Non-occupant co-borrowers are not permitted for USDA loans.
Is a USDA loan right for me?
So how do you know which type of loan is right for you? That’s where it helps to have a knowledgeable loan officer by your side. A good loan officer will listen to your needs, evaluate your specific situation, educate you on different loan products and help you select the right loan for you.
Interested in talking to a loan officer about your borrowing options? Find a licensed Castle & Cooke Mortgage, LLC loan officer near you!
Castle & Cooke Mortgage, LLC® (NMLS #1251) is a leading independent mortgage lender headquartered in Draper, Utah, with locations across the United States. Castle & Cooke Mortgage, LLC is not affiliated with, or endorsed by, the U.S. Government.
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Information contained in this Blog does not constitute legal, financial, or other professional advice or services and should not be used as a substitute for professional advice. The purpose of the Blog is to provide Castle & Cooke Mortgage, LLC’s opinions and general guidance on certain matters related to mortgages. The reader accepts full responsibility for use of the information contained herein.