No matter if you’re a first-time homebuyer from Portland looking for a loan that doesn’t require a big down-payment, or if you’re a repeat-buyer who wants more space at a bargain in Falmouth, First Financial Mortgage can certainly help you with a USDA loan!
Administered by the U.S. Department of Agriculture, this program has the official name of “USDA Rural Development Guaranteed Housing Loan Program”. It also is sometimes known as the “Section 502 Loan”, based on its standing in the charter of the USDA. An additional common name for USDA loans are “Rural Housing Loans”.
Essentially, this is a 30-year fixed loan that is intended to attract buyers to approved rural-areas that are less populated than centers of cities. It should also be mentioned some suburban areas qualify by meeting certain criteria. Manufactured and modular homes are also eligible, as 100% of a property’s price can be financed through USDA loans.
Property requirements are enforced by the USDA to assure this loan is only being applied to a rural area. PMAC Lending advises all parties interested in USDA loans to consult with us to verify their property’s eligibility. A rather generic guideline is all properties in locations with a population no more than 10,000 qualify. Properties that have a population of no more than 20,000 located in areas without a substantial amount mortgage credit also are sufficient.
Perhaps a major attraction for USDA loans is their reduced credit requirements, as well as the absence of maximum loan limits. Credit score, income, debt-to-income ratio and past rental/mortgage history are several key factors that help determine loan amounts.
Specifically for a borrower, qualifying for a government-backed USDA loan is not difficult. Not only are 0% down-payment terms routinely awarded, but USDA loans also feature low interest rates due to the Department of Agriculture’s willingness to guarantee a loan against any losses suffered. This leads to banks assuming little risk and mortgage rates being reduced lower than many other government-sponsored loan programs. Additionally, USDA loans often close within 45 days.
Many participants usually find USDA mortgage rates to be superior to FHA, VA and Conventional loans. With FHA loans, the mortgage insurance premiums in USDA loans are substantially lower, as the annual mortgage premium is only half of 1% per-year. Mortgage guarantees will not come into effect when a household goes over the income limit in its area due to USDA loans being meant for households and families with limited resources.
A household income is to not be more than 15% of the median for a household in its area, although the capacity of the household is given consideration. Households with more than eight (but no more than 12) receive an added 8%.
PMAC Lending excels in the Cumberland County areas of Portland, South Portland and Falmouth.
Click here for the income limits in those locations:
The USDA requires a state-licensed inspector to conduct an inspection to verify a property’s ability to meet its standards. All inspectors evaluate the following:
- Operational cool and heating units
- Damages caused by pests and termites
- Running water
- Plumbing and sewage disposals
- Functionality of modern electrical systems
All properties must be in sufficient structural standing, functioning properly and in good repair. If a property is deteriorating, borrowers may use funding provided to them to improve and enhance the property’s condition.
Borrowers who wish to build a new home in a rural area are also drawn to USDA loans. We advise those wanting to construct a new property to possess a thorough understanding of their area’s standards prior to starting to build their new home.
This process consists of a borrower choosing a state-licensed contractor that is to be approved by their loan officer. After the contractor is approved, the borrower, loan officer and contractor meet to assure the building plans are up to the standards set forth by the USDA. Upon the completion of the property’s construction, the contractor then receives its final payment.
Allow First Financial Mortgage to help you with all of your USDA loan needs! To get started, call us today at (207) 321-5307!