You don’t have much in the way of a down payment and maybe your credit score is less than stellar, but don’t let Google searches fool you into believing that FHA loans are your only option.
Thanks to our existence in a rural area, we are able to provide eligible borrowers with USDA Rural Development loans. A better option, in my opinion, for several reasons.
First, let’s straighten out any lingo confusion. USDA loans are also sometimes referred to as Single Family Housing Guaranteed loans, RHS (Rural Housing Service) loans, or government guaranteed loans. That info might be helpful if you choose to do more research. From here on, I’m going to refer to them as USDA loans.
USDA loans are still fairly forgiving when it comes to your credit score. They require a credit score of over 580. Keep in mind though, the lower the score, the more hoops you may have to jump through in the way of additional documentation to prove your creditworthiness.
The USDA loan program is geared towards low and moderate income individuals, so you can’t make more than an established level of income and still be eligible for this program. The limits vary by county and the number of people in your household. But to give you an idea in Ellis County, KS for a 1-4 person household the maximum income limit is $82,700, for Morgan County, CO the maximum is slightly higher at $86,250 for 1-4 person households.
If you qualify for a USDA loan, you are eligible to borrow up to the full purchase price of your home plus the upfront guaranty fee charged by the USDA. This means you will need to come up with very little of your own funds to complete the purchase of your new home.
If you were previously leaning towards an FHA loan, you should know that the minimum down payment they require is 3.50%. Both their upfront and ongoing guaranty fees are also higher than USDA loans.
Our branch in Fort Morgan, CO known as Morgan Federal Bank as well as our Kansas locations are USDA approved lenders that can help you get pre-qualified for this loan product. If you would like a loan officer to reach out and answer any questions you have, just click on the green Contact Us button and complete the form. Put “USDA loan” in the message box and we will contact within 24 business hours.
You should also know that we are a provider of Federal Home Loan Bank grants. These grants can provide eligible borrowers with down payment and closing cost assistance of up to $5,000. And now might be a good time to check out all of our low down payment programs.
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Jessica Kerr is the Vice President of Compliance and Marketing at Golden Belt Bank.