What is a USDA/Rural Housing Loan?
A USDA home loan is a zero down payment mortgage for eligible rural and suburban homebuyers. USDA loans are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture. Mortgage Masters is proud to be one of the lenders in the area that does USDA/Rural Housing Loans.
As a part of its Rural Development program, the USDA invested almost $20 billion in 2014 to help nearly 140,000 families buy and improve their homes. The program is designed to “improve the economy and quality of life in rural America.” It offers low interest rates and no down payments, and you may be surprised to find just how accessible it is.
With all types of mortgage loans to choose from, how do you know whether a USDA loan is right for you? Here’s an overview of how it works and who qualifies:
How USDA loan programs work:
There are three USDA home loan programs:
1.) Loan guarantees: The USDA guarantees a mortgage issued by a participating local lender — similar to an FHA loan and VA-backed loans — allowing you to get low mortgage interest rates, even without a down payment.
2.) Direct loans: Issued by the USDA, these mortgages are for low- and very low-income applicants. Income thresholds vary by region. With subsidies, interest rates can be as low as 1%.
3.) Home improvement loans and grants: These loans or outright financial awards permit homeowners to repair or upgrade their homes. Packages can also combine a loan and a grant, providing up to $27,500 in assistance.