USDA Loan

This program, officially known as the USDA Rural Housing Guaranteed Loan Program, is often referred to as the USDA Loan. On this page, we'll explore the program's benefits, including the notable absence of a required down payment and favorable mortgage insurance terms. Stay tuned for the second article, where we delve into the qualifying aspects, which are surprisingly straightforward. To illustrate, let's compare it to its counterpart, the FHA loan program.

Remember, this overview is not exhaustive. For a comprehensive understanding, consult with a knowledgeable lender well-versed in USDA guidelines. When your situation aligns with this program, achieving homeownership becomes more accessible.

USDA Properties

1. Zero Down Payment

USDA loans stand out with a unique feature – no down payment is required, coupled with a standard 30-year fixed term.
2. Low Mortgage Insurance

Unlike other programs, USDA loans boast the lowest-in-class mortgage insurance. Comparing the Mortgage Insurance Factor (MI factor) with FHA, USDA saves 0.75% off closing costs.
3. Max Loan Amount Calculation

USDA calculates the max loan amount solely based on the property's appraised value, allowing for financing of settlement costs, a distinctive feature not found in other loan programs.
4. Qualifying

While following FHA guidelines, USDA focuses on supporting rural housing. Two key qualifiers are property eligibility and household income caps, with specific tiers for different household sizes.

a. Property Eligibility: USDA defines "rural" based on recent census data, varying by region. Check USDA's Property Eligibility map for accurate information, avoiding external sites that may lag behind.

b. Household Income Caps: Distinct caps exist for 1-4 person households and 5+ person households. Deductions, such as childcare expenses, can be applied to adjust income calculations.

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MORTGAGE CALCULATOR

Use our home loan calculator to estimate your total mortgage payment, including taxes and insurance. Simply enter the price of the home, your down payment, and details about the home loan, to calculate your mortgage payment, schedule, and more.

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Your mortgage payments over 30 years will add up to $0.

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MORTGAGE HELP

Down Payment

The typical rule of thumb is to pay 20 percent of the home's price as your down payment, although some mortgage loans require as little as 3.5 percent down. Your down payment reduces the total amount of your mortgage loan, so the more money you put down, the lower your payments will be - or the more expensive a house you can buy.

Loan Term

Your loan program can affect your interest rate and monthly payments. Choose from 30-year fixed, 15-year fixed, and more in the calculator.

Loan Type

There are several types of mortgage loans, but the most commonly used are fixed-rate and adjustable-rate loans. Fixed-rate loans have the same interest rate for the entire duration of the loan. That means your monthly payment will be the same, even for long-term loans, such as 30-year fixed-rate mortgages. Two benefits to this loan type are stability, and being able to calculate your total interest up front. Adjustable-rate mortgages (ARMs) have interest rates that can change over time. Typically they start out at a lower interest rate than a fixed-rate loan, and hold that rate for a set number of years, before changing interest rates from year to year. For example, if you have a 5/1 ARM, you will have the same interest rate for the first 5 years, and then your interest rate will change from year to year. The main benefit of an adjustable-rate loan is starting off with a lower interest rate.

Interest Rate

This field is pre-filled with the current average mortgage rate. Your actual rate will vary based on factors like credit score and down payment.

Property Tax Rate

The mortgage payment calculator includes estimated property taxes based on the home's value. You can edit this in the advanced options.

Home Insurance

Home insurance or homeowners insurance is typically required by lenders, depending on the loan program. You can edit this number in the mortgage calculator advanced options.

HOA Fees

A homeowners association fee (HOA fee) is an amount of money that must be paid monthly by owners of certain types of residential properties, and HOAs collect these fees to assist with maintaining and improving properties in the association.