If you thought U.S. Department of Agriculture (USDA) loans were just for farmers, think again. The USDA mortgage program guarantees home loans for rural properties when buyers meet certain income limits and other criteria. If you're a first time home buyer in Wisconsin or Illinois, let Blackhawk Bank help help you take advantage of USDA home loan benefits.
What is a USDA Loan?
USDA loans are designed to encourage rural land development and economic growth. Although this type of mortgage was once primarily for farmers, the program has been expanded in recent years. Now those purchasing or refinancing a home in a qualifying rural area have access to the incredible benefits offered by these loans. The Department of Agriculture guarantees the loans against default so that lenders can offer these exceptional terms to more qualifying buyers.
We offer USDA Guaranteed Rural Housing Loans to secure safe, sanitary homes for families with low to moderate income. This program is designed to help these families purchase, renovate, or refinance a home in a rural area. No down payment is required, which sets these loans apart from traditional home loans that typically require at least five percent down.
USDA Loan Eligibility
USDA program guidelines are very specific, but don’t let that stop you from achieving your homeownership goals. In fact, properties in some suburban regions may even be eligible depending on the zip code. Our experienced USDA financing professional will help you navigate through the loan process and determine if you are eligible. Basic qualifications are as follows:
- The property must be in a rural area as defined by the USDA
- The property must be owner-occupied. Investment or vacation properties are not eligible for USDA loans
- The property must be smaller than 2,000 square feet
- You must meet the income restrictions for the county where the property is located. Each county has a maximum income limit defined by the USDA that depends on its median income, cost of living, and other economic factors
- The property owner must be a U.S. citizen, qualified alien, or non-citizen national
- The monthly payment for the property must comprise 29 percent or less of the borrower's monthly income, including loan principal and interest as well as property taxes and homeowner's insurance
- Other monthly debt payments must be less than 41 percent of total income. Those with credit scores higher than 680 may be considered for higher debt ratios
- The borrower must demonstrate a predictable income history of at least 24 months
- The borrower must be without safe, clean housing
USDA Loan Benefits
USDA loans offer a number of unique benefits that set them apart from standard home loans. USDA loans require no down payment, so qualified individuals can finance up to 100% of the home’s total purchase price. This makes them one of the more desirable loans available to homeowners. Other benefits include:
- Available 100% financing option
- Interest rates as low as one percent
- Flexible credit guidelines, including acceptance of less than perfect credit
- Streamlined processing for those with credit scores of 640 or higher
- The ability to use nontraditional credit references such as utility and/or rent payment history
Because this program is designed to help those with the greatest need, it is often a viable option for buyers who are unable to qualify for a traditional home loan.
To learn more about USDA home loans or other mortgage loans that are available, please contact one of our Mortgage Lenders. Our team is ready to help you achieve your homeownership dreams.