If you’ve dreamed of living in a remote area, you’ll quickly find that securing a great mortgage isn’t always easy, especially when you’re buying your first house. You have to come up with a large down payment, hope that your credit is good enough to qualify for a great interest rate, and find a lender that’s willing to work with you in the first place. While conventional mortgages are an option, they’re not always the best first-time buyer loans for properties in rural areas. Instead, USDA loans are a better choice. Here’s what you need to know about these loans before you apply.
You Don’t Need a Down Payment
The biggest benefit of using USDA first-time buyer loans is that you’re not required to put the full 20% down on the house to qualify for the loan. In fact, you’re not required to put any money down on the home. The USDA loan program allows you to finance the full purchase price of the house. This frees up your savings to go toward home improvements once you’re in the house.
That said, you will still need to pay for private mortgage insurance (PMI) once you close on the house. Think of this insurance as a way to pay your 20% down payment to the lender over time. You’ll make monthly payments for the insurance along with your regular loan payments until you reach 20% of the purchase price of the house. Once you do, you’ll be able to stop paying for PMI.
USDA Loans Offer Flexible Requirements
USDA first-time buyer loans are designed to help you get into the home of your dreams even if your finances are less than ideal. As long as you have a credit score of 650 or higher, you should be able to qualify for the loan. This is because the loan is backed by the federal government, securing your loan and minimizing the lenders’ risks even if you default on the loan entirely. Keep in mind that you’ll still want to shop around. Different lenders will see your financial situation in different ways and may offer you better interest rates.
Start Exploring Your Options Today
If you’re thinking of buying property in a rural area, you need to choose the right first-time buyer loans to make your dreams a reality. Reach out to the experts at Mortgage Solutions Financial and let us help you find the right loan for your needs.