A USDA Home Loan is a mortgage loan product by the United States Department of Agriculture. A USDA Home loan is a specialized mortgage product used to purchase a home. The home must be in a rural area as defined eligible by the USDA. A USDA Home Loan in California are for income qualified individuals for a home in a USDA eligible rural area. While home prices are rising in populated suburban areas and within major cities, outlying areas are often more affordable. You can often times find a larger, more updated home for a price that is substantially lower. You can find these homes around 30-45 minutes outside of the city. The commute is often longer in miles, however, there is usually not as much traffic so your commute time may not be as long.
Have you been in the market to buy a home but find yourself disappointed at how far your dollar goes? Home prices are steadily rising and borrowers’ buying power is more limited. Many people cannot even qualify to buy an entry level home or fixer upper due to decreased inventory and higher home prices. If you don’t mind living in the country such as in a rural area, you are in luck. Have you heard of a USDA Home Loan?
Here is a perfect example. In a rural area such as Marysville, California, today, you can buy a 3 bedroom and 3 bathroom, 2461 square foot home for $292,000. A comparable home in the Greater Sacramento area is $420,000. As a prior Marysville resident of four years, I can tell you that the commute time to downtown Sacramento, California from Marysville, which was roughly 40 miles, took approximately 32 minutes. As Sacramento gets more crowded, it can take over an hour to travel 30 miles within the city and on a bad traffic day, can take nearly two hours. The benefit to moving to a rural area is not only is your buying power stretched, but there is more inventory to choose from. The neighborhoods are often very quiet as they are in rural areas and you get the small city feel.
A USDA Home loan is a ZERO down home loan with comparably low interest rates. In order to buy a home using other loans such as an FHA or conventional loan, you would need a downpayment of 3.5% to 20%. With a USDA home loan you would not need a downpayment. Many downpayment assistance programs are great, however in some instances, there may be higher interest rates or required payback. The benefit to a USDA Home Loan is that there is nothing that needs to be repaid and the interest rates are decent.
In order to qualify for a USDA Home loan , you will need to meet certain income requirements. Such things taken into consideration include family size, number of minors in the family, number of students, and amount of income. Income includes Base income, and income for overtime, bonuses, commission , self-employment, dividends, rental income, and any other income received by any member of the household. Child care expenses are considered in the calculation as well. The income limits are different for each county and some counties will have higher allowances for income than other areas. USDA Home Loans require you to meet the income requirements, occupy the home as your primary residence, be a US citizen, non-citizen national or qualified alien, meet moderate credit guidelines. In some cases, you can qualify for a USDA home loan with as low as a 580 credit score.
Arlene Disessa is a senior writer and editor of California Home Loans. Arlene is a mortgage banker in California and has helped many home buyers qualify for zero down mortgage loans. She also specializes in home loans for the credit challenged borrowers. If you have credit challenges but would like to be on the path to home ownership, contact Arlene Disessa today at firstname.lastname@example.org or call her 7 days a week at 530.813.0661.