What is a USDA loan?
USDA loans make buying or refinancing a home more affordable for people who live in rural and certain suburban communities. They offer competitive interest rates, low down payments, low mortgage guarantee fees, and easier refinancing with the streamline program. USDA loans are backed by the U.S. Department of Agriculture (USDA) and offered by private lenders like Freedom Mortgage. *Inside Mortgage Finance, Jan-Jun 2022
USDA Loans
- Competitive interest rates
- No down payments for many homebuyers
- Low mortgage guarantee fees
- No loan limits
- Minimum credit score often 640
USDA Streamline Refinances
- Competitive interest rates
- Easy credit terms
- Less paperwork and faster closings
- Low mortgage guarantee fees
Ask us what USDA rate we can offer you
The rate we may be able to offer you is influenced by many things. Your interest rate may be affected by whether you want to buy a home or refinance a home with a USDA loan. Your credit score, your finances and income, as well as today’s mortgage market can also affect your rate. Freedom Mortgage may be able to offer you an interest rate that is lower – or higher – than rates offered by other lenders. Ask us today what rate on a USDA loan we can offer you.
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USDA loan FAQs
A USDA loan is a mortgage insured by the U.S. Department of Agriculture (USDA) and offered by private lenders like Freedom Mortgage. USDA loans can be used to buy or refinance a home and are frequently more affordable mortgages for houses in rural and some suburban communities.
The Guaranteed Loan Program is what Freedom Mortgage and other lenders offer to borrowers. The U.S. Department of Agriculture approves lenders to offer USDA loans via the Guaranteed Loan Program. This program is for borrowers with moderate incomes.
USDA Direct Loans are for borrowers with low incomes and can be applied for directly through Rural Development. These loans have loan limits and offer payment assistance. Freedom Mortgage does not offer USDA Direct Loans.
Yes, you can refinance USDA loans. Many USDA homeowners use the USDA streamline program to refinance their homes because it offers less paperwork and faster closings.
USDA loans do not require a down payment. However, making a down payment with a USDA loan can help you save money on interest and start building your home equity.
Guarantee fees are a type of mortgage insurance for USDA loans. The upfront guarantee fee is 1% of the initial loan amount. This fee is usually part of your closing costs. There is also an annual fee of 0.35% of the average annual unpaid principal balance.
No. Unlike the mortgage insurance on conventional loans, USDA guarantee fees cannot be removed regardless of your down payment size or the amount of home equity you have.
Yes, USDA loans come with closing costs. These can include the homeowners insurance and property taxes, title fees, and discount points. The upfront guarantee fee may also be rolled into your closing costs.
Yes, you can pay off a USDA loan early. Paying off your loan early may help you save money on interest. For some loan types, paying off your loan early can come with prepayment penalties. Prepayment penalties are not permitted within the USDA loan program.
In order to qualify for a USDA loan you must meet USDA income requirements. The home or property you’d like to purchase must be located in an eligible area and it must be your primary residence. Your credit, income, and finances must also meet your lender’s standards.
USDA loans are only eligible for use on homes or properties in specific rural and suburban communities. You can check if the home you’d like to buy is eligible for a USDA loan on the USDA’s map here.
Credit score requirements for USDA loans vary by lender. At Freedom Mortgage, we often require a minimum credit score of 640 to buy a house with a USDA loan. A credit score higher than 640 might make getting your application approved easier and could get you a lower interest rate too.
Yes, there are income requirements for USDA loans. These requirements are set by the U.S. Department of Agriculture and vary by state and county. You can check the USDA website to determine if you meet their requirements here.
The USDA does not set a limit on the price of homes financed with a USDA loan via the Single Family Housing Guaranteed Loan Program. However, your credit score, income, and other financial information may affect how much a lender is willing to loan you.
Yes, you do need an appraisal for a USDA loan. A home appraisal ensures that the home you want to buy meets USDA requirements. This includes ensuring the home is safe and in good condition. The appraisal will also look at comparable homes in the area and compare their value.