USDA home loans are mortgages either offered or guaranteed by the United States Department of Agriculture (USDA). These home loans were created to give families the opportunity to own decent homes that are sanitary and safe. In doing so, the USDA is able to improve the quality of life for local families and rural communities. At 360 Mortgage Inc. we specialize in both Guaranteed and Direct USDA Loans Liberty, Kearney, and Kansas City, Missouri.

The Single Family Housing Guaranteed Loan Program is a loan program designed for low to moderate-income households. With this loan, the USDA guarantees a portion of the mortgage that is offered by a USDA approved lender. Single Family Housing Direct Home Loans are similar loans, however they are made directly by the government and are tailored to low and very-low-income households. This is also known as the Section 502 Direct Loan Program.

USDA Guaranteed Loan Program

The USDA Single Family Housing Guaranteed Loan Program allows low to moderate-income families to purchase, build, or rehabilitate a home. The home must be used as the family’s primary residence and must be located in an eligible rural area. USDA guaranteed loans offer 100 percent financing, low interest rates, and allow for closing costs to be financed into the loan. 90 percent of the loan is guaranteed by the USDA to reduce lender risk. In order to qualify for the USDA Guaranteed Loan Program, the borrower and home being purchased must meet certain requirements.
  • Household income cannot exceed 115 percent of the median income for the area.
  • Families must be without adequate housing.
  • Borrowers must have an acceptable credit history and be able to afford the mortgage payments, taxes, and mortgage insurance.
  • The home or property must be in an eligible rural area and meet all program criteria.
USDA guaranteed loans require mortgage insurance. An upfront fee of 2.75% of the purchase price and a monthly premium of .5% of annual balance are both required.

USDA Direct Loan Program

For low and very-low income families who are unable to obtain traditional financing, the USDA Direct Loan Program offers payment assistance in the form of a subsidy direct from the USDA. Low income is defined as being between 50 and 80 percent of the area median income (AMI) while very-low is considered to be under 50 percent of the AMI. When a borrower no longer occupies the home or the title is transferred, they must repay all or a portion the subsidy. The property financed through a direct USDA loan cannot exceed 1,800 square feet and the market value cannot exceed certain limits dictated by area.

Both direct and guaranteed USDA loans can create opportunities for families to own a decent home during difficult times. At 360 Mortgage Inc. we want to make homeownership a reality for all families. For more information on USDA Guaranteed and Direct loans, contact us today. 

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