USDA Loans Houston – 100% Financing, Zero Down Payment Options USDA Home Loans
Confused between USDA Rural Housing Direct Loan and USDA Rural Housing Guaranteed Loan? In this section, we’ll explain the features of the two programs in detail. Most people think that the Guaranteed and Direct Loan are the same. But they are mistaken; these programs are designed for two different groups of people and have several differences.
The Direct Loan program, also known as the Section 502 Direct Loan program, is meant for people with low or very low incomes, so that they can get a safe, sanitary, and decent house in the rural areas. The Guaranteed Loan program offers loans to families with low to moderate income.
Income Eligibility for the program – USDA Loans Houston
The Direct Housing Loan caters to the families having low and very low income. Your household income should be below the Area Median Income (AMI) by 50% to be considered as very low. Whilst for your income to be considered as low, it should be between 50 – 80% of the AMI.
Since the Guaranteed loan is designed to assist people having moderate income, your income should be up to 115% of the AMI to qualify for the loan.
Credit Requirements – USDA Home Loans Houston
To apply for a Direct loan, you should have a good credit history and should not be able to get a loan through conventional mortgage. It is also important that you must be able to afford the monthly mortgage payments. If you have very low income, you may be eligible for payment subsidies.
To get a Guaranteed loan, you should have a minimum credit score of 620 without any major delinquencies, bankruptcies, and foreclosure in the past. Furthermore, you should be able to pay off your monthly mortgage timely, including insurance and taxes.
Loan Terms – USDA Mortgage Houston
The Direct Loan is given for a term of 33 years, if your income is above 60% of the AMI. Whereas it is given for a stretch of 38 years if your income is below 60% and if you are buying a manufactured house, then the loan period is 30 years. The interest rate is predetermined by the government.
Guaranteed loans have different amortization schemes. You can get a loan for a period of 30 years at a fixed rate of interest or you can get it for a period of 15 years at fixed or variable interest rates.
Benefits of Each Program – USDA Loans
Getting a Direct loan will be very beneficial for any individual who has low income and is not able to get a traditional loan through banks or private lenders. This program allows you to buy a decent house for yourself in the rural area, which would have been impossible otherwise. You can also save a lot of money by living in a rural area and the interest rate for this loan can be as low as 1%.
If you have a higher level of credit and income then you can avail the various benefits of the Guaranteed loan. There is no maximum purchase price and your loan amount is usually determined by your income and debt to income ratio. You can use this loan for several types of properties including existing and new homes, Planned Unit Developments (PUD), newly manufactured homes, modular homes, and condominiums. Furthermore, you can include the closings costs, guarantee fee, and even repair and renovation costs into the loan amount. In both the loans, you can get 100% financing, so that you do not have to give any kind of down payment.
For more assistance, call us today. Our loan experts will help you decide the loan option that’s best suited to your needs.