Let’s talk about loans. Before finding your dream home, it is important to get in contact with a lender to see what you can afford. The lender will talk to you about financing options and which loan will be the most beneficial for you. There are several loan types when considering purchasing a new home: FHA, conventional, VA Loan, USDA loan and the list goes on. Let’s dive deeper into the USDA loan.
The USDA loan is a government sponsored program that is designed for families who want to move into rural communities. The government finances 100% of the home price, aka. no down payment is necessary! This loan program even offers discounted mortgage rates.
What are the requirements to qualify for a USDA home loan?
To qualify for a USDA loan, your debt-to-income ratio cannot exceed 41%. You will also be required to purchase mortgage insurance. According to usdaloans.com, you will pay for mortgage insurance through two fees. One is an upfront fee that equals 1% of the loan amount. The second fee is paid annually and equals 0.35% of the loan amount.
How does USDA fees compare to other mortgage programs?
USDA mortgage rates are usually lower than other mortgage rates which results in a better deal than FHA or conventional loans.
Both FHA and VA loans have funding fees as well. FHA loans have a 1.75% upfront funding fee and VA loans have a 2.15% upfront funding fee. As mentioned previously, USDA loans only have a 1% upfront funding fee. Annual fees apply to both USDA and FHA loans for the life of the mortgage, while VA loans only require the upfront funding fee.
Private mortgage insurance, or PMI, rates can vary due to loan type, credit score, down payment and much more. In general, PMI rates can range from 0.5% to 1% of the loan amount
What communities qualify for the USDA loan?
Home Creations has three communities that qualify for USDA loans. Those are: Sleepy Hollow located in Chickasha, Farmington located in Newcastle and Blue Ridge located in Norman.
Home Creations has participating lenders who can help you through the finance process of purchasing a new home. Simply visit this link or contact Holly at 405.364.9999 and she will get you in contact with one of them!
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