At Coast2Coast Mortgage, we understand that the dream of homeownership can seem out of reach for many, especially in rural and suburban areas where financing options may be limited. That's why we're proud to offer USDA Rural Housing loans, which provide an excellent opportunity to finance your rural or suburban home purchase with no down payment required.

What Are USDA Loans?

USDA loans are mortgage loans backed by the United States Department of Agriculture (USDA) as part of its Rural Development program. These loans are designed to promote homeownership in rural and eligible suburban areas by offering zero down payment financing, competitive interest rates, and reduced mortgage insurance costs compared to other loan programs.

Rural Housing Made Affordable

USDA loans make homeownership possible in rural and suburban areas with zero down payment and reduced costs. This government-backed program is specifically designed to help moderate-income households in rural areas achieve the dream of homeownership without the significant upfront costs typically associated with buying a home.

Key Benefits of USDA Loans

Zero Down Payment

Finance 100% of your home purchase with no money down required. This is one of the most significant advantages of USDA loans, as it eliminates one of the biggest barriers to homeownership - saving for a down payment.

Lower Costs

Reduced mortgage insurance costs compared to other loan programs. While USDA loans do require both an upfront guarantee fee and an annual fee, these costs are typically lower than the mortgage insurance premiums required for FHA loans or private mortgage insurance for conventional loans with less than 20% down.

Rural & Suburban Areas

Available in many rural and suburban areas across the country. The USDA's definition of "rural" is broader than many people expect, with many suburban areas on the outskirts of major cities qualifying for these loans.

Guidelines For USDA Loans

Location

Property must be in a USDA-eligible rural or suburban area. The USDA provides an online eligibility map that allows you to check if a specific property address is eligible for USDA financing. Many suburban areas that are not traditionally considered "rural" may still qualify.

Income Limits

Must meet USDA income limits for your area and household size. These limits vary by location and are based on the median income for the area. Typically, your household income cannot exceed 115% of the median income for your area.

Credit Score

Typically 640+ required, some flexibility available. While 640 is the typical minimum score for automated underwriting approval, borrowers with lower scores may still qualify through manual underwriting if they have compensating factors such as low debt ratios or stable employment.

Property Type

Must be owner-occupied single-family home. This includes traditional single-family homes, townhouses, condominiums, and manufactured homes that meet certain requirements. Investment properties are not eligible for USDA financing.

Why Choose a USDA Loan?

USDA loans offer several advantages that make them an excellent choice for eligible borrowers:

• No down payment requirement, allowing you to preserve your savings for other expenses
• Competitive interest rates, often lower than conventional loans
• Lower mortgage insurance costs compared to FHA loans
• Flexible credit requirements with consideration for borrowers with limited credit history
• Ability to finance closing costs into the loan in some cases

For those looking to purchase a home in a rural or eligible suburban area, USDA loans provide an affordable path to homeownership with minimal upfront costs.

Frequently Asked Questions About USDA Loans

How do I know if a property is in a USDA-eligible area?

The USDA provides an online eligibility map where you can enter a property address to determine if it's located in an eligible area. Many suburban areas on the outskirts of cities qualify, so don't assume a property isn't eligible just because it's not in a remote rural location.

What are the income limits for USDA loans?

Income limits vary by location and household size, typically set at 115% of the median income for the area. It's important to note that the USDA considers the income of all adult household members, not just the borrowers on the loan.

Do USDA loans require mortgage insurance?

Yes, USDA loans require both an upfront guarantee fee (currently 1% of the loan amount) and an annual fee (currently 0.35% of the outstanding loan balance). However, these fees are typically lower than the mortgage insurance required for FHA loans or conventional loans with less than 20% down.

Can I use a USDA loan to purchase a fixer-upper?

Yes, but the property must meet certain minimum property requirements at the time of purchase. The USDA also offers a loan program specifically for purchasing and renovating homes, known as the USDA Section 504 Home Repair program, which can be used in conjunction with a USDA purchase loan in some cases.