USDA home loans are mortgages that are either offered or guaranteed by the United States Department of Agriculture (USDA). The purpose of the loans is to provide families with the opportunity to own decent homes that are both safe and sanitary. In doing so, the USDA is able to improve the quality of life for both families and rural communities as a whole. West Ridge Financial specializes in both Guaranteed and Direct USDA Loans throughout Roosevelt, Vernal, and Alpine.
The Single Family Housing Guaranteed Loan Program is a loan in which the USDA guarantees a portion of a mortgage that is made by an approved lender. This program is designed for low to moderate-income households. Single Family Housing Direct Home Loans, also known as the Section 502 Direct Loan Program is a similar program, however these loans are made directly by the government and are tailored to low and very-low-income households.
Guaranteed Loan Program
The USDA Guaranteed Loan Program allows qualified families to purchase, build, or rehabilitate a home to be used as their primary residence in eligible rural areas. These loans offer 100% financing, low interest rates, and allow for closing costs to be financed into the loan as well. To reduce risk for lenders, the USDA guarantees 90% of this loan amount. In order to qualify for the Guaranteed Loan Program, both the borrower and home must meet certain requirements.
- Household income cannot exceed 115% of the median income for the area.
- Families must be without adequate housing.
- Borrowers must have an acceptable credit history and be able to afford the mortgage payments, taxes, and mortgage insurance.
- The home or property must be in an eligible rural area and meet all program criteria.
Mortgage insurance is required on USDA guaranteed loans. An upfront fee of 2.75% of the purchase price and a monthly premium of .5% of the balance annually.
Direct Loan Program
The USDA Direct Loan Program offers payment assistance to low and very-low income families who are without adequate housing and who are unable to obtain a more traditional loan. Low income is defined as between 50 and 80 percent of the area median income while very low is under 50 percent of the area median income. Payment assistance is offered directly by the USDA in the form of a subsidy. Borrowers must repay all or a portion the subsidy when the borrower no longer occupies the home or the title is transferred. The property financed through a direct USDA loan is restricted to 1,800 square feet or less and the market value cannot exceed certain area limits.
At West Ridge Financial we understand the difficulties families in Duchesne and Uintah counties are facing with the job losses and economic difficulties arising from decreasing oil prices. USDA loans can create opportunities for families to secure decent housing during difficult times. For more information on USDA Guaranteed and Direct loans, contact us today.