The U.S. Department of Agriculture nowadays offers programs to finance the purchase of properties by individuals. These loans differ from a traditional mortgage in that it provides up to a 100 percent loan if your income does not exceed the prescribed maximum income requirement for the county you are interested in and as long as the property is located in a rural area as defined by the USDA.
Reaping the benefits
There are major benefits to getting a loan backed by the U.S. Government. These loans can be used by rural Americans to purchase or refinance, to renovate or repair, or to relocate a home. They offer 100 percent financing meaning no down payment is required with a loan that comes with a low fixed interest rate as well as payments. Take note that the USDA guarantees only 90 percent of the loan. Additionally it may also be possible to roll in the closing costs or to use gift funds and grants contrary to other programs. It may even be possible to qualify with a credit score as low as 620 or to make use of credit references like mobile phone, utility bills and insurance. On top if it their rates are truly great.
All the different cuts
Although these loans are aimed at assisting lower income groups they can also be used by those who want to grab cheap land prices, buy up foreclosures or just move out to where the air is cleaner. The major requirement is that your income should not exceed 115 percent of the median income in your area. They also come in many packages as long as they are of the 30-year fixed rate kind. If your calculation comes to 29 percent or less when you divide your gross monthly income into the sum of insurance, taxes, interest and the original loan amount you cut the mustard. If on top of that your total debt when divided by the earlier gross monthly income does not exceed 41 percent you have hit the bull’s eye.
Tips to navigate the maze
You should time it such that you have been employed for at least two years when you apply. Just out of school? No problem as school counts towards work history. Recently became self employed? The two year clock has just started ticking. If you have any revolving debt that is 50% of your allocated high credit limit you should pay them off and be careful not to max out your credit cards. Do your best to avoid late payments or collections. Keep as much money as possible in your bank account and don’t move it around to other accounts. Pay your rent by check rather than cash as underwriters get very happy when they find a paper trail. Make sure you keep a positive bank account.
Follow these tips and speak to the folks at the USDA and before you know it you will have beefed up your life to the point where you can pop your corn in your own home.
