The United States Department of Agriculture (USDA) administers a wide array of loan programs aimed at promoting development in rural areas, including single- and multi-family housing programs, community facilities, and rural business-cooperative services. As a homebuyer, the USDA's single-family home loan program works to guarantee home loans and, in some cases, makes direct loans for the purchase of homes and property. If you are interested in pursuing a USDA loan, be it in Goodlettsville or elsewhere, be sure to explore the following loan options.
Single-Family Housing: Direct Home Loans
Known as the Section 502 Direct Loan Program, this USDA program provides payment assistance to low-income families. The payment assistance subsidy reduces the mortgage payment for a period of time in order to make homeownership more affordable for vulnerable individuals and families.
Eligible home buyers must be interested in a home that is within a rural zone established by the USDA. Applicants for a USDA loan must have an adjusted yearly income that is at or below the minimum income limit set for the area. The applicants must also demonstrate their understanding, willingness, and ability to repay the mortgage debt.
Additionally, applicants must meet the following criteria:
- Be without safe housing at the time of application
- Be unable to obtain a loan at acceptable terms from other sources
- Purchase the property as the intended primary residence
- Be a US citizen who is not banned from participating in federal programs
In addition to geographic restrictions, properties purchased through the program generally cannot be larger than 2,000 square feet and are subject to additional restrictions.
The payment subsidy must be repaid when the home is sold, the title is transferred, or the borrower is no longer living in the home.
Single-Family Housing: Guaranteed Loans
The USDA guarantees loans for single-family homes for applicants who meet certain criteria. As the loan guarantor in this program, the USDA does not make direct loans to applicants, rather, it works with approved lending institutions to make loans to low- and moderate-income individuals and families who wish to purchase a qualifying home.
To be eligible for a guaranteed loan, an individual or family must:
- Meet income-eligibility for the area
- Be a US citizen, non-citizen national, or Qualified Alien who wishes to purchase the home as their primary residence
- Must not have been banned from participating in federal programs
- Must be willing to meet the credit obligations associated with purchasing an eligible property in a rural area
Funds obtained through a guaranteed loan may be used for a variety of purposes, including:
- Purchasing a primary residence, including applicable closing costs and fees
- The repairs and rehabilitation associated with an existing dwelling
- Refinancing eligible loans
- Purchasing and installing mechanical systems, making structural improvements, or appliances in order to make the home habitable
Eligibility Requirements for USDA Loans
In order to qualify for a USDA loan, the borrower must be a U.S. citizen or must be a permanent resident. The borrower must also have stable and dependable income, good credit and an adjusted income that is equal to or less than 115% of the median income for the area. USDA borrowers must be trying to purchase a property in a qualifying rural area.
It's best if borrowers must have a credit score of at least 640 or more. Borrowers who have a credit score of less than 640 may have to meet stricter requirements in order to qualify for the loan. Finally, some guidelines for USDA loans can vary from one lender to another. The borrower must check with each lender to find out whether they can meet the lender's requirements.
Borrowers with a significant credit history that shows willingness to repay the loan will have an easier time qualifying for the loan than those who do not. Those who do not have a lengthy credit history may need to meet stricter requirements to qualify.
Learn More About the USDA Loan Today
For those interested in exploring a USDA Home Loan, the USDA Rural Development home page allows applicants to establish initial property and income eligibility. Applicants will need the property's address and their income information to determine whether or not they can qualify for a direct or guaranteed loan. Additionally, an experienced real estate agent can work with applicants to locate a home that is eligible for the USDA's program.
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