Homebuyers looking to live in certain “rural areas” throughout the country now have an even more affordable way to get a home mortgage loan.
Beginning Oct. 1, 2016, the USDA drastically reduced its fee schedule for its SDA Rural Development Guaranteed Housing Loan — a no-money down, government backed mortgage loan. The move means qualified borrowers could save hundreds, if not thousands, of dollars.
The change in fee schedule involves both the Upfront Guarantee Fee and the Annual Fee:
- Upfront Guarantee Fee
In year’s past, the upfront guarantee fee has always been 2.75%. Beginning Oct. 1st, the upfront guarantee fee was slashed to 1%.
- Annual Fee
Prior to the reduction, the annual fee for a USDA loan was 0.5%. Beginning Oct. 1st, the annual fee has been reduced to 0.35%.
The changes to the fee schedule, coupled with the no-down payment requirement, means the USDA mortgage loan is easily one of the most affordable loan products available today.
But how do you know if you qualify for a USDA mortgage? And what makes a property eligible for USDA financing?Do You Qualify for a USDA Mortgage?
The USDA Rural Housing Program offers low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible suburban and rural homebuyers can use it for 100%, no-money down mortgage financing.
Eligible rural areas are determined by income limits. The USDA has an interactive map to better help you determine eligibility.
Applicants must meet the following requirements to be considered for USDA Rural Home Loans:
- Meet income-eligibility (see interactive map)
- Agree to personally occupy the dwelling as their primary residence
- Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien
- Have the legal capacity to incur the loan obligation
- Have not been suspended or debarred from participation in federal programs
- Demonstrate a willingness to meet credit obligations in a timely manner
- Purchase a property that meets all program criteria
If you’re unsure of whether you qualify for a USDA mortgage, be sure to speak with an experienced mortgage broker who can better help you determine eligibility, as well as other potential mortgage products available to you.