What do you do if don’t have a lot of liquid assets to make a down payment and the high costs of conventional loans and mortgage insurance have you wondering if you’ll ever be able to buy a house for your family? A USDA loan could be the perfect path to home ownership for you and your family.

What are USDA loans?

USDA loans are loans guaranteed by the government that don’t require a down payment or mortgage insurance while still offering low interest rates. The USDA charges a small annual fee (0.50% of the loan amount) with each month’s payment and an up-front funding fee of 2.750% which can be rolled into the loan.

Why choose a USDA loan?

A USDA loan relieves you of the burden of having to make a large, up-front down payment which is great if you don’t have a lot of cash available right away. It’s also easier to make your monthly payments because you don’t have the added expense of mortgage insurance. Despite all of this, the interest rates on these loans are sometimes even lower than those on other types of loans.

Am I eligible for a USDA loan?

You can get this loan if you are buying a primary residence in certain areas of your state and if you meet the income requirements. This mortgage program is the only government-sponsored mortgage program that will allow you to deduct expenses like daycare costs from your monthly income to help you lower your income and meet the requirements (much like deductible expenses when you do your taxes). It can be confusing to calculate your income and figure out your deductible expenses, so give 417 Home Loans a call and one of our mortgage bankers can help you figure out if you are eligible.