What Are the Pros and Cons of a USDA Loan?
- No down payment option (100% financing)**
- No cash reserves required.
- Flexible credit and qualifying guidelines.
- Seller can pay closing costs.
- Low fixed interest rate.
- No pre-payment penalty.
- Ability to finance repairs and closing costs into loan.
- Good for purchase or refinance.
Furthermore, what are the pros and cons of a USDA loan?
As MoneyCrashers reports, these loans offer several appealing advantages:
- No down payment is needed. For many would-be homeowners, amassing a sizable down payment is a huge hurdle. …
- Lower interest rates are the norm. …
- Credit requirements are relaxed. …
- Closing costs can be rolled into the loan. …
- USDA loans are assumable.
Thereof, is a USDA loan worth it?
Is a USDA loan good? A USDA loan is a great option for buyers with moderate or low income. It lets you buy a house with nothing down and low mortgage rates — two huge benefits that only one other loan program (the VA loan) offers. If your home is in an eligible area, it’s worth exploring a USDA-guaranteed loan.
What is the downside to a USDA loan?
Disadvantages of USDA Loans
These include: Geographical requirements: Homes must be located in an eligible rural area with a population of 35,000 or less. Also, the home cannot be designed for income-producing activities, which could rule out certain rural properties.
How long does it take to close on a USDA loan 2020?
about 2-7 days
Do you have to pay back a USDA loan?
Answer: No, you can move and sell your home anytime with USDA 502 Guaranteed Loan. The USDA mortgage does NOT have any prepayment or early payoff penalty. You can sell/pay off your loan whenever you like without restriction or fees. This is also the case with other Government-backed loans like FHA and VA.
Is it hard to get approved for USDA?
Qualification is easier than for many other loan types, since the loan doesn’t require a down payment or a high credit score. Homebuyers should make sure they are looking at homes within USDA-eligible geographic areas, because the property location is the most important factor for this loan type.
What is the maximum purchase price for a USDA loan?
Even though the USDA Guaranteed Loan has no limit on the amount you can borrow, it’s highly unlikely any borrower could get a USDA Loan for more than $300,000-$400,000. Since the USDA loan is geared towards low-to-moderate income families, they have strict income limits.
Is USDA or FHA better?
FHA vs. conventional. A USDA home loan is often the best choice for borrowers who meet the U.S. Department of Agriculture’s guidelines. With no down payment requirement and low mortgage insurance rates, USDA mortgages are often cheaper both upfront and in the long run than FHA loans.
Does USDA annual fee ever go away?
USDA may assess a late fee to the lender if the annual fee is not paid when due. The applicable upfront guarantee fee and/or annual fee may differ for a purchase and refinance transaction. The annual fee will cease to be collected when 80% loan to value (LTV) is achieved.
Can I rent my house if I have a USDA loan?
Yes, you can rent your home even if it is a USDA mortgage. However, beware, if there is a deficiency on the transaction, the USDA will still legally be able to pursue any deficiency.
What is the minimum income for a USDA loan?
USDA eligibility for a 1-4 member household requires annual household income to not exceed $86,850 in most areas of the country, but up to $212,550 for certain high-cost areas, and annual household income for a 5-8 member household to not exceed $114,650 for most areas, but up to $280,550 in expensive locales.
How much is the USDA annual fee?
USDA Mortgage Insurance Fees
USDA mortgage insurance is paid via two fees: an upfront guarantee fee equal to 1 percent of the loan amount, and an annual fee equal to 0.35 percent of the loan amount.
How long does USDA underwriting Take 2020?
about 2-3 weeks