What to Choose: A USDA or FHA Loan?
The Federal Housing Administration and the United States Department of Agriculture both offer different home loan programs. They have some similarities and distinctions that make them relevant to home buyers in different situations, depending on what’s needed, and where it is needed. If you’re looking for the right mortgage branch opportunity, consider these characteristics in deciding which loan is right for you.
A USDA loan is a loan distributed through the United States Department of Agriculture on behalf of the residents who are in need. The main distinction for these types of loans is a focus on farmland and agriculture as an industry for the person buying the home or property. These loans are intended for homes that are more modest in their cost and design, and usually run a term of 30 to 38 years. If yours doesn’t exceed a median income for your area, you may qualify for this type of home loan.
The Rural Housing Guaranteed Loan is a type of USDA loan, also known as the Section 502 loan, that specifically focuses on rural area land purchases, building, repair and renovation. The purpose of these loans is to make a home livable, safe, and sanitary using borrowed funds.
You don’t have to live in rural area for an FHA loan to apply to you. Although the qualifications vary depending on where you live, they’re focused on your credit and other financial factors. These loans come as insured, not guaranteed, loans. These loans in general have a minimum down payment requirement of 3.5 to 10 percent, and your credit score will determine where at on that down payment scale you land.
How to Apply for a Home Loan
You’ll need to clean house on your finances before applying for a home loan. Gather information on your monthly income, the sum total of all of your debts and debt payments, and your credit score. Then you’ll need to do a few calculations based on your expected income over time, to consider what you’ll be able to afford. A mortgage is a long-term commitment, so understanding what kind of payments are reasonable and under what timeline they’re most financially sound is essential. You’ll also have to establish how much of a down payment you’ll be able to provide.
The right mortgage branch opportunity is out there for you. It might take knocking on a few doors first to find the right mortgage partner for your next home purchase, but that’s simply a normal part of the process.