USDA Mortgage Loans

[EmsMom]

Does anybody have any experience with these?  At my income level I am eligible for a no down payment loan at 3.5% interest in a nearby area targeted for rural development.  The guy at the office made it sound very appealing.  Can you offer any perspectives?

[pitter_patter]

I have a USDA loan and have been very happy with it.  I had restrictions on the properties I could buy, one stipulation was no pool.  There was a loophole that the house could have a pool as long as it would appraise for or above the loan amount if the pool wasn't counted in the appraisal.  Closing was 60 days, the bank even did a few repairs after the inspection.

[Jodie]

We got one, no issues. 3.5% sounds like a geat interest rate!

[EmsMom]

really happy to hear these stories.  I talked to the man in my county and there are  two kinds of USDA loans; the one for very low income has the 3.5% but if you are merely low income, you pay market rate but still don't need a down payment.  As soon as I get a regular job (graduating this month), I will know where I stand.  I don't know if there is any advantage to the market rate loan other than not needing to save up a down payment.  But it might be better to keep cash on hand if the interest rate is not too high.  But I think I would put extra towards the mortgage anyway since I have no other debt.  I guess one advantage to the USDA loan would be I wouldn't have to qualify for a regular mortgage which could be difficult although I have excellent credit, because of my low income.  I have to say it is a very nice program  from the way it sounds and I wonder how many people actually know about it?

[witchygrrl]

How do you know what houses are eligible?
 

[EmsMom]

Certain areas are deemed eligible based on rural development needs and then within that area there is are limitations based on the price of the house (I found the housing limits were quite reasonable for the area I am looking at).  There is some general information on the USDA rural development website, but I got more specific information by searching for USDA loans in the county I was looking at.  It doesn't seem like a well known program at all and it is very attractive.  As soon as I get a job I am going to apply.  I could actually apply now with my current part-time income, but as I anticipate it changing (just graduated from master's), the person I spoke with said that I should wait.  Right now I am "very low income" category but my job might (hopefully will) put me into the more moderate income categories that have a higher interest rate.