Buying a home usually involves getting a mortgage, and most people recognize the terms “conventional loan,” “FHA loan” and “VA loan,” but there is another loan program, known as the USDA loan, that is underwritten by the United States Department of Agriculture and has terms and qualifiers better than any other program available. Current USDA underwriting turn times are the same as for other loan packages, and funds are available now. The only hitch – and the word “agriculture” in the name should provide a clue – is that the property must be in a rural area.
Finding a Qualifying Property
The U.S. Department of Agriculture Rural Development website leads you to the local contacts for USDA loans, who can introduce you to the program and help you begin your property search. The representative in your area tells you where to look for qualifying properties. If you don’t want to live in any of the qualifying areas, then the USDA loan isn’t for you.
Home shopping and loan shopping go hand in hand. After supplying substantial paperwork to the lender, you are told how much you can spend on a property. This is a smart first step, as there is no use spending time finding a home and falling in love with it only to realize that your financial situation won’t qualify you for that home. Knowing your spending limit is the best way to go about purchasing a home, and in fact, most real estate agents won’t even show you property until you are “mortgage approved” by a lender.
The Purpose of a USDA Loan
To encourage home ownership in rural areas, the government instituted the USDA loan program in 1991. The premise was that by committing to a community, the homeowner helps the economy of that community and stabilizes both the economy and the area. Continue reading “Does a Lender Approving a Loan Mean the USDA Will Also Approve the Loan?”