USDA 100% Financing Mortgage Loan
USDA Loans vs Other Loans
USDA mortgages have a number of differences from other type of loans, including other government loans. For example, they are always fixed rate loans. The program does not offer any adjustable-rate mortgages. There are few requirements regarding the house itself as long as it is located within one of the qualifying Rural Development areas. The main limitation on the home is that it must be a single-family home.
As far as requirements go, it’s often easier to get a USDA loan because they do not require as high of a credit score—the minimum is 580. They may also require less income. The minimum income needed to qualify for a USDA loan does vary by location, plus that limit increases if more than four people will be living in the house. Generally, the income to debt ratio will be between 29% and 41%. Those who have more debt may still be able to get a USDA loan by submitting an income ratio waiver or if their credit score is higher than 660.
Why Apply for a USDA Loan?
In addition to the lower required credit score, there are a few other reasons why a person may want to apply for a USDA loan. One of the biggest reasons is that it’s possible to get 100% financing through USDA. There is no down payment required for those who qualify. The only other type of mortgage that offers this is a VA loan.
Here are some of the other benefits to a USDA loan:
- All of the closing costs may be received as a gift.
- The sellers may pay as much as 6% of the closing costs.
- The closing costs and even renovation funds can be included in the loan.