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What Is a USDA loan?

The iServe Blog


What Is a USDA loan?

Oct 4
7:47
AM
Category | The iServe Blog

If you dream of a Pinterest-worthy home in the suburbs, then a USDA mortgage might be the right product for you. This program is designed to increase home ownership in rural and suburban areas and is often overlooked by new buyers. The benefits of the USDA loan make it well worth your time to look, though, particularly if you can afford to make mortgage payments but do not have a large down payment ready.

How USDA Loans Work

USDA loans are backed by the Department of Agriculture and may be funded by a traditional lender or the USDA itself. A USDA loan generally offers no-down-payment options with low interest rates and covers a wide range of areas and incomes. There are three types of USDA loans, as of 2017:

  • Guaranteed loans: A private mortgage lender provides you with a mortgage loan and the USDA guarantees that loan. This process is similar to an FHA or VA loan.
  • Direct loans: These loans are made by the USDA itself and are not as readily available as USDA loans through private mortgage lenders; there are strict income guidelines. If you qualify, though, your interest rates may be very low.
  • Home improvement loans and grants: These are awards or loans for rural homeowners who need to fix up an existing home and can be as much as $27,500 as of 2017.

How to Apply for a USDA Loan

You’ll need to start by talking to a residential mortgage loan officer, who can help you determine if this program is right for you. You’ll need to check both your income and the location of your prospective home to determine if you would be eligible for this affordable loan product.

The “rural” part of USDA loans often leads to borrowers thinking this useful mortgage product is just for farms, but many locations that are not in a city or urban area are eligible.

Once you determine if you are eligible, you will need to complete a residential mortgage application and supply any needed documentation requested by the mortgage lender. The loan will then need to be processed and underwritten to determine if you qualify.

Learning more about this powerful home loan tool can help you secure a home you’ll love at an affordable rate. If you’re interested in learning more about the USDA loan process, we can help. Our team of residential lending and mortgage loan officers is ready to help you make the most of your home search and truly benefit from this helpful product.

 

iServe Residential Lending, LLC is not affiliated with or acting on behalf of or at the direction of the USDA or the Federal Government.

Programs, terms and guidelines subject to change without notice. Not all applicants may qualify. All loans subject to underwriter and investor approval. Arizona Mortgage Banking License BK-0920658; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License  413-0646; Regulated by the Division of Real Estate Colorado Supervised Lender #988552; Georgia Residential Mortgage Licensee License #19613; Licensed by the New Jersey Department of Banking and Insurance License # 512567; Licensed Mortgage Banker—Licensed Mortgage Banker-New York State Department of Financial Services License # B501014; Licensed by the Virginia State Corporation Commission; Virginia Lender License #MC-3220, NMLS #2914 (www.nmlsconsumeraccess.org). iServe Residential Lending, LLC, NMLS #2914-15015 Avenue of Science Suite 250, San Diego, CA 92128 Phone: (858) 486-4169