Getting a home loan request approved can be difficult if you don’t have the credit score and income to prove that you can pay it back. Fortunately, if you’re looking for a home in a rural area, you can sign up for USDA loans in San Antonio. Take a look at how they can help you achieve your goal of a new and better home.
What is a USDA Loan?
The USDA loan is a type of home loan from the US Department of Agriculture. It’s a part of their Rural Development Guaranteed Housing Loan program. It’s also called a Section 502 loan—a reference to Section 502 of the 1949 Housing Act, which allows the government to provide this type of assistance. The loan aims to provide low- and mid-income borrowers with the means to purchase homes in rural areas throughout the USA.
Offering the USDA loan is also another way for the government to encourage Americans to start a life in smaller communities instead of crowding in highly urbanized cities. By doing so, these new households can help invigorate the economy in their area.
How Do USDA Loans Work?
USDA loans can be separated into two types: guaranteed loans and direct loans.
USDA-guaranteed home loans are offered by private lenders, such as Supreme Lending, but backed by the USDA. They’re generally intended for buyers in low- or moderate-income households. You can use it to buy and repair an existing house or build a new home.
USDA-guaranteed loans don’t require you to pay a down payment. You can borrow as much as 100 percent of the house’s total value. In return, mortgage insurance is included with the monthly payments to protect the lender in case the borrower fails to pay the money back.
While the interest rates vary with each lender, they’re generally lower compared to conventional loans. Furthermore, they may only offer the loan at fixed rates and with a 30-year term. So if you were to take a loan with a two percent interest rate, it won’t change for the entire duration of the term.
Meanwhile, direct home loans are funded directly by the USDA. They’re only available for borrowers with incomes far below the income limit in their area. Much like other USDA loans, you can use the money to buy an existing home, build a new one, or repair the existing house. The loans don’t require down payments, have fixed interest rates based on market rates, and have terms that reach 30 years or more.
USDA home loans are available for both first-time and repeating home buyers. You may also use it to refinance a previous loan from them.
How Do You Qualify for USDA Loans in San Antonio?
Homebuyers have several conditions to meet if they want to apply for USDA loans, such as:
For more details on their requirements, you can check out the USDA’s fact sheet here.
Why Should You Get a USDA Loan?
A USDA loan is an excellent option if you don’t have a large income and want to live in a quieter area farther away from the city. It also provides you another option for financing the house if you can’t qualify for a conventional home loan. And since you’re not required to make any down payments, you can keep the cash you currently have and use it for other matters, like investing or emergencies. The fixed interest rates can also help you budget your money more effectively since you don’t have to adjust your payments whenever the market rate rises or falls.
Here at Supreme Lending, we offer USDA loans for San Antonio residents. From complying with your loan requirements to closing the mortgage, the team can assist you throughout the process of financing your rural home. If you want to apply for a home loan or have any questions, you can get in touch with us here on the website.