A USDA home loan is a mortgage that is insured by the US Department of Agriculture. These loans are available to rural homeowners who may not qualify for other types of mortgage loans.
USDA home loans can be used to purchase or refinance a home, and there is no down payment required. There are also no monthly Mortgage Insurance Premiums (MIP), which can save borrowers hundreds of dollars per month.
USDA home loans are available with fixed or adjustable interest rates, and the interest rate is typically lower than what is available from other lenders. Borrowers who have trouble qualifying for a conventional mortgage may find that a USDA home loan is the perfect solution.
QUICK TIP: Believe it or not, USDA loans are only for primary residences. So, if you're looking for a second home, a USDA is not the best option – sorry! |
Pros
- There are flexible requirements.
- The seller can pay closing costs, saving you even more money.
- There's no down payment required.
- No monthly Mortgage Insurance Premiums (MIP), which can save borrowers hundreds of dollars per month.
- USDA home loans are available with fixed or adjustable interest rates, and the interest rate is typically lower than what is available from other lenders.
- USDA loans are available as a refinance option, too.
Cons
- USDA loans can be used on homes in certain areas.
- There are income limits to qualify.
- Specific homes qualify for USDA loan (single family, condo, fixer uppers, land) Not duplex homes.
- It might take longer to approve since the U.S Department of Agriculture must review the application itself.
Who is this ideal for? Borrowers who have trouble qualifying for a conventional mortgage may find that a USDA home loan is the perfect solution.
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