What is a USDA Loan?
What Exactly is a USDA Loan?
First time home buyers or previous homeowners new to the USDA loan program often ask what is a USDA loan. Due to the fact that the program is available only in eligible areas many home buyers aren’t as familiar with the program as they might be with conventional loans. This week’s video tip explains what a USDA loan entails to buyers new to the program as well as its many benefits.
Benefits to a USDA Loan
- 100% financing
- Home repair financing is available
- First time home buyers are eligible
- Previous homeowners are also eligible
- Available for primary residences only
- USDA loans are only available in eligible areas
- 30 year fixed rates with no prepayment penalties
- Flexibility to finance closing costs up to the appraised value
What is not Eligible?
- No multi-unit properties such as a duplex or a triplex
- No income producing land or structures allowed
- Properties located in non-rural areas
- Not a raw land or farm loan
- No second homes or investment properties
- Must be cautious when already owning other properties in the area
- No non-occupying co-signers (FHA allows this)
- Roads must be hard surfaced or suitable for all weather