Rural homebuyers have distinct advantages when searching for their perfect homes. Finding the right mortgage from lenders with rural homebuyer programs involve a lot of research, including new terminology, reams of paperwork, and fees that must be paid throughout the process. It's essential in the home-buying process that rural homebuyers find the best rates, right terms, and lowest closing costs. Finding the best options for rural homebuyers ensures that new homeowners get into their new homes quickly and efficiently. The three best lenders with first time homebuyer programs include Mortgage Lenders of America, Quicken Loans, and New American Funding. Ask these questions when pursuing the best options for a rural homebuyer loan.
What are different mortgage loan options for rural homebuyers?
There are several different types of mortgage loans. These include conventional fixed-rate mortgages, FHA loans, VA loans for veterans and service people, interest-only mortgages, and adjustable-rate mortgages. While all mortgages can be used for rural areas, sometimes specialized loans are needed and preferred.
Are there specialized home loans available?
There are a few specialized home loans available for those who qualify. Rural homebuyers can take advantage of VA and USDA home loan programs. VA loans allow service members and veterans to purchase homes often without a down payment. A USDA loan targets rural areas and allows 100 percent financing.
Should I apply for a VA loan?
Rural homebuyers who have served or currently serve in the military may qualify for a VA loan. This type of loan offers 100 percent financing, requiring no down payment.
What are the details of the USDA Home Loan?
This loan program is officially called the U.S. Department of Agriculture’s Rural Development Single Family Housing Loan Guarantee Program. It's also known as the "Rural Housing Loan" or "Section 502" loan. Like the VA loan, the USDA home loan offers 100 percent financing.
What are the advantages to getting a USDA Home Loan?
Along with 100 percent financing, this loan offers many benefits. One is the two percent mortgage insurance fee that is added to all loans, as well as the costs of eligible improvements and repairs. This is less than half of the private mortgage insurance attached to conventional loans. The upfront fee is only 1 percent, which is much lower than FHA and conventional loans, and applicants can borrow more money as there is not a specific size limitation to rural loans.
How do I qualify for a USDA Home Loan?
To qualify for a USDA home loan, home buyers much purchase a home in an eligible area. The term "rural" is open a bit to interpretation, and eligible properties may be located in unexpected parts of the country. The second requirement is that household incomes must not be higher than 115 percent of the qualifying area's median income.
How much home can I afford to buy with a USDA or VA Home Loan?
This is an essential question to answer before even starting to look for a home. How much mortgage homebuyers choose to take on depends on a variety of factors, including down payment, income, current debt, interest rates, and length of the mortgage loan, among others. First time homebuyers need to research how much they can afford to pay each month, working backwards to determine the answers to the other questions.
How much of a down payment will be required?
The amount of down payment required depends on the type of loan secured. FHA loans can range from 0 to 3.5 percent downpayment. Other specialized loans - like the USDA loan - may also not require a down payment.