USDA Loans

In 2009, the United States Department of Agriculture (USDA) introduced changes that made millions of borrowers eligible for their rural mortgage programs. Many home buyers dream of purchasing a home but don’t necessarily have the cash on hand to make the hefty 20 percent down payment required by a conventional home loan.

USDA mortgages stand alone as the only zero-money-down programs available to borrowers who have not served in the military. These loans are not limited to home purchases only—they can also be used for home repairs, improvements, or refinances. Eligible borrowers will be hard-pressed to find a loan program that offers more favorable terms.

What Is A USDA Loan?

USDA Rural Development home loans are mortgages for homes located in designated rural areas. These loans are guaranteed by the United States Department of Agriculture (USDA), which allows you to secure a mortgage without a down payment. However, the actual home loan may be provided by a private mortgage lender.

In addition to assisting lower-income home buyers, rural development loans are designed to help bolster communities in rural areas.

Who Qualifies?

USDA loans used to be considered “farmers' loans,” but that is simply not the case anymore. Just about anyone looking to purchase a home outside a major metropolitan area can qualify for a USDA loan. Because of the USDA’s geographic designations, 97 percent of the United States’ areas fall within eligible territory—including homes in suburban and exurban areas.

Eligibility standards for a USDA loan include the location of the home (county and zip code), your current income, credit history, and the number of dependents you have. Because these guidelines are very specific, it is important to work with a lender experienced in USDA government financing, like me, to help determine your eligibility.

USDA Direct vs. Guaranteed Loans

There are two types of USDA home loans:

USDA Guaranteed Loans: These loans are issued through a lender. This is the type of USDA home loan provided by Griffin Funding.
USDA Direct Loans: These loans are issued directly by the USDA. While it might seem simpler because it comes directly from the source, there are quite a few restrictions for this option, including that you must be very-low income and unable to obtain financing elsewhere.

USDA Loan Primary Benefits

The primary advantage of a USDA home loan is that it allows low-to-middle-income individuals or families to purchase a home with zero down payment. However, there are many additional benefits to securing a USDA loan for your new home, including:

Primary Benefits:

No down payment required: USDA loans offer 100% financing, minimizing the upfront costs of buying a home.
Flexible credit score requirements: You can qualify for a USDA loan with a FICO score as low as 600.
Relatively low interest rates: Because USDA loans are government-backed, lenders often provide exceptionally low interest rates.
More flexible guidelines: You can still qualify for a USDA loan if you've had a bankruptcy or foreclosure, as long as three years have passed.
Affordable mortgage insurance: USDA loans feature a low upfront guarantee fee of 1% and an annual guarantee fee (paid monthly) of 0.35%.

When you apply for your USDA guaranteed loan with us, we strive to make the process as simple and streamlined as possible; in most cases, we can complete everything within 30 days or less.

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