These loans can be especially helpful when you’re already dealing with rising interest rates.ĭirect loans are mortgage loans that are issued directly by the USDA. The USDA guarantees these mortgages as long as they’re through a participating lender, so you can get a favorable interest rate even without a down payment. Loan guarantees work similarly to VA loans, where the loan is backed by an organization so borrowers are eligible for more favorable lending terms. When you apply for a USDA loan, you have to choose which of the three programs you want to apply for: loan guarantees, direct loans, or home improvement loans and grants.
That being said, it’s important to keep in mind that there are limitations in terms of location and other USDA loan requirements you may have to meet to be eligible for USDA loans. Because these loans are backed by the USDA-thus making lenders feel more secure-buyers can be eligible for better loan terms. USDA loans are offered through the USDA Rural Development Guaranteed Housing Loans Program. Unlike traditional loans, which require a down payment and may come with higher interest rates, USDA loans offer more favorable lending terms for the borrower.
These loans are specifically designed for rural home buyers.
What Is a USDA Loan?Ī USDA loan is a type of mortgage loan offered by the United States Department of Agriculture. With a USDA loan, qualifying home buyers can purchase a home with little to no down payment and access highly competitive interest rates and terms. USDA loans are a type of mortgage offered to home buyers in rural areas.
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