Does anyone know about USDA Loans?

[MsKarmaNYC]

Hello All,

I just wanted to know what is the difference between a USDA and FHA? Are these loans all government backed loans? What is the qualifications for these types of loans. Me and my husband live in Alabama and they are constructing new homes in my area and a neighbor told me that they used a USDA loan. Any information will be helpful, we are first-time home buyers but my husband has the income over 60k and I am in school so I have no income. DTI 2%, our scores range btw 620-680 but my credit is slightly better than my husband. Thanks in advance.

[Anonymous]

They are both government backed loans. The purpose of USDA loans is to provide affordable housing in rural areas.

You have to be in a qualifying area (determined by population) , be within the income limits, and have reasonable credit. It sounds like you probably meet those requirements.

USDA is really better than FHA. You pay a 2% fee up front, essentially mortgage insurance, but then don't have any monthly PMI. You can finance 102% of the value, meaning you don't need a downpayment and can finance the 2% fee. (You would still have normal closing costs, but in many cases those can be paid by the seller.)

[MsKarmaNYC]

deemac, Thank you for that information. I was doing some research on it but got thrown off when it said Department of Agriculture. I guess being from New York City I did not know that we were living in a somewhat rural area... we live outside Birmingham. We been here for almost 4 yrs. I was just speaking with the Builders for the home we are renting now and they doing another development site like the one we currently reside in not too far from where we live. I guess we go over and see what happens. Thanks for the info!!!

[WannaHouse]

When searching for the information specifically for your state, use your states initials after USDA

So, your you, search USDA.gov/La

http://www.rurdev.usda.gov/la/

Message Edited by WannaHouse on 03-09-2009 05:25 PM