Why consider a Rural Home Loan with USDA?

May 31, 2023

Buying or building a new home is an exciting process that includes many steps such as picking finishes, preferred locations and most importantly, securing the proper financing based on your home and personal needs. If you prefer to be in a more rural setting, possibly a city with a smaller population or backing to a countryside, you may be interested in the U.S. Department of Agriculture (USDA) Rural Home Loan program which can offer no down payment, no closing costs and a low interest rate*.

In 2017, as part of its Rural Development program, the USDA helped more than 125,000 families upgrade or buy their homes. These low interest rate loans on new construction homes can be used on production homes – homes that are already in the process of being constructed or recently finished – or on custom homebuilding.

Thanks to an expert team and plenty of housing options, Hubbell Homes and Origin Homes can help you apply, qualify and create or choose your home in as little as 30 days.

With all types of mortgage loans to choose from, how do you know whether the USDA loan is right for you? Check out our overview below!

USDA Loan Overview:

  • $0 down payment
    • The average down payment in the U.S. is roughly 6% of the loan value. Ex: If you purchase a $300,000 home, a $18,000 down payment could be expected.
  • You may qualify for $0 closing costs
  • 125%* interest rate on a 33-year mortgage
    • While fluctuating, the current mortgage rate is near 7.25% in Iowa. This reduced interest rate can equal significant cost savings over the loan term. It’s evaluated on a monthly basis!
  • Fair or OK Credit Score
    • You must have a credit score of 640 or higher for streamlined processing. If you fall below 640, you will still be considered but may need to meet more standards.

Other qualifications to consider are that loans can fund only owner-occupied primary residences, you must have a dependable income for a minimum of two years, U.S. Citizenship (or permanent residency), and a variety of debt ratios will be considered based on your monthly payments and credit score. See more outstanding circumstances at the USDA website.

What Types of Homes Generally Qualify?

  • Homes generally need to be less than $377,000 in value and many direct loans are used on homes that are 2,000 square feet or less. It all depends on where you live!
  • Rural towns and locations with populations less than an estimated 20,000 qualify for USDA home loans
    • Metro areas with a population greater than 20,000 are generally excluded from loan qualifications, but there are some low population suburbs that qualify!

Next Steps

Hubbell Homes and Origin Homes make it extremely easy to apply through a specific loan program specialist who will help gather your information and materials, so your application is quick and easy.

If you run into any loan qualification issues, our team is here to walk you through the options and offer a home and a different loan through our preferred vendors that still meets your needs and budget.

* *Fixed rate mortgage Direct Loan Program. Qualifications are based on credit history, income, location of home, home value and additional factors. Primary residency restrictions apply.

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