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USDA Loans In Grand Junction

USDA home loans, also known as USDA Rural Development Guaranteed Housing Loans, are mortgages offered by the United States Department of Agriculture to encourage homeownership in eligible rural and suburban areas.

These loans provide low-to-moderate-income households with the opportunity to purchase a home with favorable terms, including no down payment requirement and competitive interest rates.

To qualify for a USDA home loan, applicants must meet certain income requirements and the property they intend to purchase must be located in a designated rural area as defined by the USDA.

This program aims to promote growth in rural communities by making homeownership more accessible to those who may not qualify for traditional mortgage loans.

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How can I qualify for a USDA loan in Colorado?

To qualify for a USDA home loan, applicants must meet the following criteria:

  1. Income eligibility: Applicants must have a steady income that does not exceed the income limits set by the USDA for the specific area where the property is located.  Income limits can vary by state and county as well as your personal situation.  FOr example, a family of 5 could have a higher income exception than a family of three.  Check with a First Choice Financial representative to determine your income thresholds.

  2. Property eligibility: The property being purchased must meet USDA guidelines for rural or suburban areas. The home must be in an eligible location designated by the USDA.  You can view the USDA Property Eligibility Tool to see if your new home is in a qualified area.

  3. Credit score: While there is no minimum credit score requirement, applicants should have a reasonably good credit history to qualify for a USDA loan. Recent bankruptcy or delinquency can disqualify you.

  4. Debt-to-income ratio: Lenders will consider the applicant’s debt-to-income ratio to ensure they can afford the monthly mortgage payments.

  5. Citizenship or legal residency: Applicants must be U.S. citizens, non-citizen nationals, or qualified aliens with the legal right to reside in the U.S.

Meeting these qualifications is essential to be eligible for a USDA home loan. Applicants should consult with a USDA-approved lender, like First Choice Financial, to assess their eligibility and determine if they meet the requirements for the program.

What is a USDA Guaranteed loan?

A USDA Guaranteed Loan is a type of mortgage loan program offered by the United States Department of Agriculture (USDA) to help individuals and families purchase homes in eligible rural areas. This program is designed to provide lenders with a guarantee against losses in case borrowers default on their loans, encouraging lenders to offer financing to borrowers who may not qualify for conventional loans.

Key features of USDA Guaranteed Loans include:

  • 100% financing, meaning no down payment is required.

  • Competitive interest rates.

  • Flexible credit requirements.

  • No private mortgage insurance (PMI) requirement.

  • Income limits based on the area’s median income.

  • Properties must meet certain criteria regarding location, size, and condition.

  • Upfront and annual guarantee fees may apply.

Overall, USDA Guaranteed Loans provide a pathway to affordable homeownership for eligible individuals and families in rural areas by offering favorable terms, low barriers to entry, and financial security for lenders.

How is the USDA guaranteed loan different from a direct loan?

The USDA guaranteed loan and the direct loan are both types of loans offered by the U.S. Department of Agriculture to help individuals in rural areas obtain housing or improve their existing homes. Here are the main differences between the two:

USDA Guaranteed Loan:

  • Issued by: Offered by private lenders such as banks and mortgage companies.

  • Guarantee: USDA guarantees a portion of the loan to the lender, reducing the risk for the lender.

  • Eligibility: Borrowers must meet income requirements set by USDA.

  • Fees: Borrowers pay a guarantee fee and annual fees.

  • Interest Rates: Interest rates may be lower compared to conventional loans.

  • Purpose: Used to purchase or refinance a primary residence.

 

USDA Direct Loan:

  • Issued by: Offered directly by USDA.

  • Eligibility: Borrowers must meet income requirements set by USDA.

  • Interest Rates: Fixed interest rates that may be lower than market rates.

  • Repayment: Repaid directly to USDA over a period of up to 38 years.

  • Purpose: Used to provide affordable homeownership opportunities for low- and very low-income households in eligible rural areas.

Both loan types have specific requirements and benefits, so it’s essential to understand the differences before choosing the most suitable option.

Other low-downpayment, government backed loans that we can help you secure a home with:
FHA Loans in Grand Junction, CO
VA Loans in Grand Junction, CO

If you need to know more about USDA loans in Grand Junction don't hesitate to call First Choice Financial at (970) 683-1910.

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First Choice Financial

Grand Junction, CO

(970) 683-1910