If you don’t have the massive income to buy a home in New York, fret not! USDA loans are great for low to moderate income families that need a home in rural and suburban areas. This is also a great choice for those who don’t have a positive credit history or don’t qualify for some of the traditional home financing and mortgage options. The USDA loan options are designed to improve the quality of life and economy in rural areas, and you can get a loan with very basic requirements. Here’s a list of things you need to know.
What’s required to get a USDA loan?
Okay, for starters, you can only get a USDA loan for selected rural areas, and there are income limits for applicants. In short, if you have considerable income, you cannot ask for a loan just because you want to get a house in rural region. You can check online to find a blog post to check relevant limits and norms for your county. Also, these loans are only available for primary residences, which mean that you cannot use the money for investment or rental property.
- First and foremost, you must be a US citizen or must have permanent residency.
- Secondly, you need to have a dependable source of income for at least 24 months.
- Next, you must be able to pay for the loan, which includes interest, taxes and other things like insurance, should be more than 29% of your income per month.
- The total payments, including the mortgage, shouldn’t increase 41% of your monthly income.
- The USDA does consider the credit score, and a score of 680 or more is considered to be decent. However, certain things beyond your control may have affected your credibility, and USDA will consider that.
- You can still get a loan when the score is lower than 680, but there are stringent norms with regards to that. Also, if you don’t have a credit score, you can still apply for the loan.
USDA Loans can be categorized into three segments. The first is a Guaranteed USDA Loan, for which USDA partners with local lenders and will guarantee for a portion of the mortgage. The second choice is given by USDA itself for extremely low-income groups. There is also a third one called Home Improvement Loan and Grant, which is offered to borrowers to upgrade or improve your home. Check online for more details.