Some Facts on the USDA Loan Program

The USDA loan is the most underutilized and under-appreciated loans available today. It is a no down payment mortgage loan that, in many cases, covers closing costs as we. Many view the USDA loan as a farm loan, or a loan only eligible for way out in the country. Actually, the USDA loan no longer covers farm loans. And it actually covers a many suburban areas too. Compare the loan to a conventional loan, and the credit requirements are much more forgiving. Some lenders can take on credit scores as low as 620! Also, there is very low monthly mortgage insurance attached to USDA loans. Unlike the PMI included in a FHA or conventional loan, the USDA loan requires mortgage insurance at a fraction of the cost. The interest rate associated with the USDA loan is often lower than that of other loans as well. Another difference between the USDA loan to other mortgage loans is that the loan doesn’t allow for a cosigner, only a co-borrower. The difference is that a co-borrower must be someone who will be living in the home as well. The USDA loan also does not typically cover manufactured homes. Also, there is a limit to how much land can come with a specific property – 30% of the value of the property. The program is also not limited to first time home buyers. And unlike many other loans, the loan can potentially work with a borrower who has had a chapter seven bankruptcy within 3 years of its discharge date and within 3 years of a foreclosure. This requires the borrower to have a pristine credit history as well as other requirements, but most loans do not allow for any leeway when it comes to the time frame after a BK or FC. The USDA loan is a wonderful loan if you’re current circumstance is not ideal, or even if you’re just looking for a loan with the most advantages for you.

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