USDA for Purchase and Refinance
What is a USDA for Purchase and Refinance Loan
The USDA Rural Housing loan is another Government guaranteed loan designed specifically to support home ownership in rural areas or lower income families. The loan offers a number of great benefits such as 100% financing, low interest rates, and reduced mortgage insurance costs. In many areas it is the best option for people with little to no down payment and no veteran benefits.
Some of the restrictions of the USDA loan is that it is only eligible in certain areas in each state. Areas that are restricted are cities with higher populations. The USDA loan also has Income limitations based on the size of the household and the county income averages.
USDA loans are typically used for purchasing new homes but they also have a streamline feature which allows the loan to be refinanced if rates improve. However the refinance can only be used if the existing loan is a USDA home and there are no cash out options.
Who is eligible for this loan?
You may be eligible for a USDA loan if you are not considered a high income household, live in a moderately rural area and do not own another home within 50 miles of the home you’re looking to purchase. You do not have to be a first time buyer but you can only own one other home at the time of purchase and that home must be at least 50 miles away.
What are the benefits of this loan?
- No down payment requirements
- Credit Scores as low as 620
- Lower rates and Mortgage insurance than conventional financing
- Streamline refinance option to avoid appraisal and some documentation requirements.