USDA Home loand are a good way to go if you live in a rural area and are qualified to obtain one. First, lets make clear that there are two USDA home loan programs. The first is a USDA Direct Loan which is actually originated and serviced by the USDA. The second is a USDA guaranteed loan which is originated and serviced by a private lender but guaranteed by the USDA. I am not sure which program you are talking about. Interest rates on USDA direct loans are dictated by your income and can be as low as 1%. The benefit of a USDA guaranteed loan is that there is no down payment required . . . similar to an FHA which requires 3% down.
If you have concerns about the interest rate, you are probably using a guaranteed loan. First check to see if you qualify for a USDA direct loan. If not, check around for better rates as they may vary by lender.
Best of luck to you I hope this helps.
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The following is a listing of HCFP programs which might be of interest to individuals interested in buying or renovating a home. Click on a link for a brief description of that program.
Single Family Housing
Direct Loan Program
Loan Guarantee Program
Mutual Self-Help Housing Program
Home Repair and Preservation
Direct Loan & Grant Income Limits
Guaranteed Loan Income Limits
Homes for Sale
The Single-Family Housing Program provides homeownership opportunities to low and moderate-income rural Americans through several loan, grant, and guarantee programs. The program also makes funding available to individuals to finance vital improvements necessary to make their homes decent, safe, and sanitary.
Direct Loan Program (Section 502)
Under the Direct Loan program, individuals or families receive direct financial assistance directly from the Housing and Community Facilities Programs in the form of a home loan at an affordable interest rate.
Most of the loans made under the Direct Loan Program are to families with income below 80% of the median income level in the communities where they live. Since HCFP is able to make loans to those who will not qualify for a conventional loan, the HCFP Direct Loan program enables many more people to buy homes than might otherwise be possible. Direct loans may be made for the purchase of an existing home or for new home construction.
To learn more details about this program, click here.
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Loan Guarantee Program (Section 502)
Under the Guaranteed Loan program, the Housing and Community Facilities Programs guarantees loans made by private sector lenders. (A loan guarantee through HCFP means that, should the individual borrower default on the loan, HCFP will pay the private financier for the loan.) The individual works with the private lender and makes his or her payments to that lender.
Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income people is the lack of funds to make a down payment, the availability of the loan guarantees from HCFP makes the reality of owning a home available to a much larger percentage of Americans.
For more details about this program, click here.
· 1 decade ago