Planning to purchase one of the homes for sale in Owosso MI? If you’re eyeing a property in a rural area, then you must learn about USDA loans before applying for a mortgage. This is an unpopular mortgage specifically made for low-income earners. Some options are available to fit different possible financial situations as well.
How does this loan help low-income earners? Are you eligible for it, and how can you take advantage of it for a rural home purchase? Read on to understand this beneficial mortgage.
Understanding USDA Loan and using it to Buy Homes for Sale in Owosso MI
What is USDA Mortgage Loan?
In a nutshell, USDA, or US Department of Agriculture, a mortgage loan is a 0%-down payment scheme for low-income earners. It also features low-interest rates that low income or very low-income buyers can afford. However, you need to be eligible for such a loan before the USDA would grant it to you. Here are a few factors you must meet for eligibility:
Low or Very Low Income
As mentioned above, this program is specifically for low-income earners. These are people who cannot afford to buy a decent, sanitized and safe house through traditional ways. However, low and very low income is defined differently in each state. In Michigan, for example, you’re eligible when only one person in the household earns less than $24,860 for a family of four.
Has a Dependable Job
Although this mortgage is for low-income earners, you must prove to the government that you’re capable of paying the loan. Thus, when you plan to buy one of the homes for sale in Owosso MI, be sure to have a continuous dependable job for the last 24 months.
Good Credit Score
Next, you must have a good credit history to become eligible for the program too. Your overall monthly payments such as principal, insurance, and taxes must not exceed 29% of your monthly income. And your other monthly debt payments shouldn’t exceed 41%.
Eyeing a Rural Home
Reliable realtors Owosso MI can help you with this point. You’ll qualify for USDA loan if you plan to live in rural areas, whether in Michigan or some other state. Some suburbs can be considered as well, but it wouldn’t apply to any urban properties.
On a side note, you must only purchase a primary home in a rural area. USDA mortgages won’t cover income lands such as farms.
Choices for USDA Mortgage
If you think you’re eligible for the USDA loan, you should check the two possible loan options under such a program. Choose one which fits your financial situation.
USDA Loan Guarantees
This choice works similarly to FHDA loans. You must visit a participating local lender, then get a mortgage loan under USDA. Such loan comes in low to zero down payment and only has a small interest rate. But you need to pay for mortgage insurance when you opt to put small or zero down payment.
USDA Direct Loans
This is the more favorable choice for very low-income earners, though some low-income earners can benefit as well. This is a mortgage loan that the USDA directly provides, and has lower interest rates as well as zero down payment.
So, before you apply for a mortgage, be sure to check the USDA loan first. This will help a lot when you want one of the homes for sale in Owosso MI today. Fulfill its conditions, and you’re off towards a great mortgage deal.
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