What’s the Difference Between USDA Direct and Guaranteed Loan?
What’s the Difference Between USDA Direct and Guaranteed Loan?
Abstract
What is a USDA Guaranteed Loan? USDA Single-Family Housing Guaranteed Loans allow low- to moderate-income applicants to purchase homes in eligible rural areas. Since the U.S. government insures these products, OVM Financial can offer the following loan benefits: Funds to purchase, build, relocate, or rehabilitate a home Lower interest rates than FHA or conventional loans 100% financing for primary dwellings No down payment requirements 30-year, fixed-rate mortgages Even though you're not required to make a down payment, doing so can lower your overall interest expense and provide a bit more leeway in your monthly budget. What is a USDA Direct Loan? If you're unable to obtain proper housing or secure a home loan from another resource, the USDA Single-Family Housing Direct Loan may be able to help. Unlike Guaranteed loans, Direct loans do come with a loan limit, which is typically $336,500 but can reach up to $970,000. You simply have to meet the following requirements: Occupy the property as your primary residence Possess the legal capacity to obtain a loan Meet citizenship and eligible noncitizenship requirements Be eligible for participation in federal programs Purchase property in a USDA-eligible area A USDA Guaranteed Loan is typically the best option for most USDA-eligible home buyers. If you're interested in the USDA Direct Loan it's important to note that this loan option is offered only by the USDA. However, our team can support a USDA guaranteed loan purchase. In order to have access to USDA home loan funds, your new home must be located in one of the following types of places: Open countryside A rural town with a population of 2,500 or less A town with a population of up to 10,000 people if it is rural in character An urban area that is not classified as part of a larger metropolitan area with a population of 2,500 to 49,999 people Properties in a larger town may still meet USDA property eligibility requirements if the locality has little to no mortgage loan access for low- to moderate-income families.