- December 22, 2017
- Posted by: David Jacobson
- Category: Uncategorized
OakStar Bank: Am I Eligible for a USDA Loan?
Regardless of what loan you apply for, getting a home loan is stressful. You are faced with a seemingly never-ending list of factors and variables to sort through in your search, including interest rates and down payments. Down payments are arguably the most difficult variable to sift through because they are often so expensive. A typical home loan requires a 20% down payment, a figure that many families can’t afford. In today’s blog, David Jacobson and OakStar Bank will look at a loan that may help you avoid that heft down payment: a USDA Loan.
What is a USDA Loan?
In 2009, the U.S. Department of Agriculture began a rural development loan program that offered loans to eligible rural and suburban homebuyers at zero down payment. These loans used to be known as “farmers loans” but are now accessible to a wider base of potential homeowners. In fact, nearly anyone who is looking to purchase a home outside of a major metropolitan area can qualify for a USDA Loan. And unlike government-backed home loans, some USDA loans are actually issued by the USDA, through the USDA Rural Development Guaranteed Housing Loan Program, and not just insured by the government.
How do USDA Loans Work?
There are three types of USDA home loan programs: loan guarantees, direct loans, and home improvement loans and grants. Loan guarantees are similar to an FHA loan because they guarantee a mortgage from a private lender rather than issuing the loan themselves. Direct loans are issued by the USDA and are for low-to very low-income applicants. Lastly, home improvement loans and grants are loans or financial awards given to homeowners to repair or upgrade their homes. These “packages” can be either loans, grants, or both and can sometimes reach over $25,000 in assistance.
Do I qualify for a USDA loan?
There are several requirements that go into qualifying for a USDA loan. To start, the desired property must be located in a rural region and not in a metropolitan region. The USDA determines this based on zip code and county. The desired property must also be occupied with investment properties not being eligible for these loans. However, the most stingy requirements will be of the economic variety. Income qualifications play a big part in this process, especially if you are looking for a direct loan. As noted in the last paragraph, these loans are for low- to very low-income applicants.
David Jacobson and OakStar Bank Can Help
Figuring out if you are eligible for a USDA loan is a complicated and intricate question. David Jacobson and OakStar Bank can help get you some clarity. Contact us at (417) 830-7300 or visit our website for more info.