The only way to find the best mortgage for you is to do your homework. While conventional loans are the most common ways to finance your home, you might find other options especially if you are in a low to moderate income household.
The dream of owning a home is not unattainable even if you are an ordinary employee. Thanks to the support of government mortgages, you can find ways to finance your home purchase without needing to save for years or working multiple jobs.
The USDA loan is one of the lesser-known but better ways to get the money for your home purchase. It is a government-insured mortgage program that offers 100% financing without any down payment required. The goal is to encourage people to buy homes in less dense areas, which are not necessarily restricted to rural areas as some suburban neighborhoods might also be qualified. In fact, 97% of the country is eligible, so it is definitely worthwhile to check it out.
Why Go For A USDA Loan
For first time buyers, coming up with the cash or financing to pay for a home is not that simple, which is why finding loans like this is important. Because of the no down payment requirements, 100% financing, and the lower interest rates, it is one of the best mortgages out there. You will not get saddled up with high monthly payments that you will struggle to pay for.
Moreover, the no down payment is perfect for those who have not been able to save up the past years for it. You will not have to postpone your home purchase for many years simply because of this requirement.
The USDA loan can cover up to 100% of the property value, but you do not have to borrow as much. At the same time, you will find the mortgage rates much friendlier than others, with some going as much as 0.40% below other conventional mortgages. The reason for this is that they are guaranteed by the US Department of Agriculture.
In comparison, the mortgage insurance rates on a 30-year fixed-rate USDA loan can be just half of an FHA mortgage insurance and even up to 66% less of a private mortgage insurance rates in a conventional mortgage. In short, for a loan that does not even require down payment, you will end up paying much less compared to other mortgages.
How To Qualify
One of the misconceptions is that the USDA loan is only for rural areas, which is not true. They are available in areas that have low-density population. While you cannot apply to buy in the city, many suburban areas around can be qualified. Moreover, even if you have a moderate or modest income, you will still be able to avail of this loan.
In fact, there are very few or none other mortgages that can compare to the USDA loan, which is why you should consider it if you are a potential homebuyer but looking for better options other than conventional loans.