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The case for using a USDA home loan

Key and metal shape of home

For Central Georgia homebuyers with limited financial flexibility, turning to the US Department of Agriculture (USDA) for home loan support can be the essential stepping stone toward a successful purchase.

Read on to learn more about how this financing option can bring you one step closer to your next home.

What sets USDA loans apart from other common mortgage options?

The USDA provides financial assistance to moderate-income to very low-income homebuyers with the intention to spur homeownership and economic growth in America’s rural areas. To achieve this, the USDA extends some of the most accessible and favorable financing programs with key features like:

  • No down payment requirements
  • Competitive loan interest rates
  • Low monthly mortgage insurance premiums
  • Flexible credit requirements

Homebuyers should note, however, that not all houses for sale in Houston County, GA are eligible for a USDA loan. The property you are eyeing must be located in a designated rural or suburban area in order to qualify for financial support from the USDA.

To make sure that you can qualify for a USDA loan, ask your agent to recommend eligible areas in Houston County where you can focus your home search.

Who can apply for USDA home loans?

In addition to location-based restrictions, the USDA applies rigid eligibility criteria to ensure that financial assistance is extended to homebuyers that need it the most.

Basic eligibility requirements for USDA loans include:

  • US citizenship or permanent resident status
  • A source of dependable income, preferably with a minimum of two years
  • A credit score of at least 640 (borrowers with a lower score can still apply, but will be subjected to more rigid underwriting criteria)
  • Credible credit history – no record of late payments within the previous 12 months
  • An adjusted household income that does not exceed 115% of the median income of the area

The base USDA income thresholds for Warner Robins and other Houston County locations are as follows:

Moderate-income households:

  • $86,850 (1-4 members)
  • $114,650 (5-8 members)

Low-income households:

  • $46,700 (1-4 members)
  • $61,650 (5-8 members)

Very low-income households:

  • $29,200 (1-4 members)
  • $38,550 (5-8 members)

The USDA compares these numbers against your adjusted household income. This figure includes the total annual income of all adult members of the household and subtracts acceptable deductions, such as the recurring costs of medicine and child care.

You can determine the exact adjusted income that applies to your household using this official USDA tool.

For more details on eligibility requirements for USDA loans, click here.

What types of loan programs are available from the USDA?

These two options are available for individuals and families that are buying a home:

  • Single Family Housing Direct Home Loans

    The USDA issues direct loans to borrowers that fall under the low-income and very low-income categories. These loans come in the form of payment subsidies that reduce the homebuyer’s mortgage amount for a fixed period.

    Direct Loans may be used for homes of up to 2,000 square feet, with a market value lower than the area’s designated loan limit. For Houston County, USDA Direct Loans may be used for properties valued at or lower than $251,862.

    Interest rates for Direct Loans can be as low as 1% with a payback period of up to 33 years for low-income borrowers, or 38 years for very low-income borrowers.

    Additional eligibility requirements apply to USDA Direct Loans. Applicants will qualify only if they:

    • Do not have access to decent, safe, and sanitary housing
    • Are unable to obtain loans from other sources
    • Are not barred or suspended from participation in federal financing programs
  • Single Family Housing Home Loan Guarantees

    Homebuyers that earn more, but still fall within the moderate household income limit can apply for a USDA Loan Guarantee instead.

    In this scenario, the loan comes from a USDA-approved financial institution. Instead of subsidizing the borrower’s mortgage payments, the USDA provides a 90% loan note guarantee to protect the lender in case the borrower defaults on the loan.

    The USDA’s guarantee helps qualified homebuyers secure favorable mortgage interest rates, even if they cannot afford to provide a substantial down payment.

In addition to loans designed to reduce the financial burden of purchasing a house, the USDA also extends financial assistance (up to $27,500) to low-income households that include senior-age adults and people with disabilities. This program is designed to support essential home repairs and renovations intended to improve the quality of life of its residents.

For complete details on the USDA’s Single Family Housing Programs, click here.

Learn more about your ideal mortgage options when you shop for the best homes for sale in Central Georgia. Consult the real estate specialists at Warner Robins Home Search today. Send your inquiries here to get started.