If you don’t have much saved for a down payment and are willing to buy in a more rural part of North Carolina, then a USDA mortgage loan could help you buy a home.
Want to learn more about these no-down-payment mortgages or see if you qualify for one? Read on below or reach out to Janice Fowler at Perennial Mortgage Group of Raleigh today.
USDA mortgages are home loans that are backed by the U.S. Department of Agriculture. They’re designed to spur settlement of more rural, undeveloped parts of the country and are only available in certain eligible locations. To see if a property you’re thinking of buying would qualify, check the eligibility tool at USDA.gov now.
The main reason you’d want to use a USDA mortgage loan is to avoid paying a down payment. USDA loans require zero down, and you can finance your entire home purchase with them. On top of this, you can also roll your closing costs into the loan balance, which lowers your up-front costs of homebuying even more.
Another perk of USDA loans is their low interest rates. Because these mortgages are guaranteed by the government, mortgage companies are able to offer extremely affordable rates without added risk or cost.
Advantages of USDA loans:
USDA loans aren’t without their disadvantages, though. For one, they can only be used in certain parts of the country, and they also can’t help finance an investment or vacation property purchase. Additionally, USDA loans require private mortgage insurance, which adds both an up-front cost and a monthly fee to the equation.
Another downside is that not all mortgage companies offer USDA loans. You’ll have to use a USDA-approved mortgage lender in order to apply for a loan.
Disadvantages of USDA loans:
USDA loans are designed with low- and middle-income earners in mind. In order to qualify, you can’t make more than 115 percent of your country’s median household income. (Use this tool to see if your income qualifies).
Additionally, the home you’re purchasing must be in a designated rural area. You can check the eligibility of a property you’re considering at USDA.gov.
Finally, you’ll also have to meet certain credit and debt-to-income ratios, though these vary across mortgage companies. You can generally expect to need at least a 620 credit score in order to qualify for a USDA mortgage loan.
If you’re open to buying a home in a more rural area of North Carolina, then you might want to consider a USDA loan to help you finance it. Not only can USDA loans eliminate costly down payments from the equation, but they can also significantly reduce your up-front costs of homebuying by rolling your closing costs into the loan. This allows you to pay them over time and, in many cases, even buy a home sooner than you’d originally expected.
Do you want to learn more or get prequalified for your USDA loan? Then get in touch with Janice Fowler at our Raleigh office today. We’re here to help.