USDA loans – RHS loans are programs that provide 100% financing option for qualified borrowers and properties. The U.S. Department of Agriculture (USDA) offers residential home loan programs to help low to moderate-income individuals living in small towns or rural areas achieve homeownership. The United States Department of Agriculture guarantees the loan.
The Rural Housing Service (RHS) helps qualifying applicants, who cannot receive credit from other sources, purchase modestly priced homes as their primary residence. The Loan Advisors is one of the approved USDA Lenders. We are a USDA Guarantee Lender in the area that can provide any information you need to secure a USDA loan.
USDA – RHS loans are an attractive option for some borrowers because of the following:
- Minimal closing cost;
- Low or no down payment;
- No Mortgage Insurance.
RHS loans can be used toward the purchase and renovation of a previously owned home or a new construction. Families must be able to pay their monthly mortgage, homeowner’s insurance, and property taxes.
There are two (2) types of USDA home loan programs:
- USDA Direct – reserved for borrowers whose household income does not exceed 80% of the Area Median Income (AMI). As the name implies, a borrower must apply directly to the USDA Regional Office that serves the area they are looking to purchase the property. If a borrower wishes to build, renovate, or include the cost of the improvement to the loan, they must opt for the Direct program.
- USDA Guaranteed – are for borrowers who make more than 80% of the AMI but not exceed 115% of the said Area Median Income. USDA Guaranteed Home Loans are offered by USDA approved lenders and are guaranteed by the Department of Agriculture. The subject property must meet certain requirements in order to qualify. For starters, the property must be for primary residence use only and cannot be income generating in any manner.
USDA loans have nothing to do with agriculture and are not intended for farmers; instead, their purpose is to help build many of the nation’s smaller communities.
This simply means that in order to qualify, the property you would like to purchase cannot be located within a big city’s limits. It can, however, be located outside of a city’s limits. Also, the population of the area must be of less than 20,000 people. Some counties qualifies for USDA loan as a whole. Not too many lenders out there offer USDA financing. The Loan Advisors is one of the few lenders that offer USDA home loan program and financing.
A borrower must meet the 3 basic requirements to qualify for USDA financing: (a) credit, (b) income, and (c) asset, respectively. For additional information about the restrictions and eligibility requirements, contact our USDA Home Loan Specialists at (866) 772-3802 to get started.