What is a USDA Rural Development Mortgage?

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Where's home for you?

Is it living in a quiet suburb with friendly neighbors, just a car ride away from your favorite Italian restaurant or movie theater? Or have you always longed to live in a more secluded and natural setting, miles away from your nearest neighbor?

Whether you choose the suburb or the country, the USDA Rural Development Loan might help you reach your destination. What is it, exactly? The Rural Development loan is a 100% financed home loan, insured by the United States Department of Agriculture to promote homeownership in less-dense communities. It can be a good option if you're buying your first home or having trouble saving for a down payment. It's one of the few loans, other than the VA loan, that doesn't require you to have cash upfront for the down payment.

The main criteria for the loan is that the home needs to be located within certain geographical areas that are rural, or less-populated, as designated by the USDA. This often includes villages, small towns and suburban areas near larger cities and includes many locations that may surprise you. Many people do not realize that properties in almost every area of the country outside major metropolitan centers can be purchased with a USDA Loan. Check here for USDA Rural Development Eligibility (on this page click "Single Family Housing" under "Property Eligibility"). You will also find credit score requirements and income limits with the USDA Rural Development loan.

Budget-friendly benefits:

No Down Payment Option (100% financing)
No cash reserves required
Flexible credit and qualifying guidelines
Seller can pay closing costs
Low fixed interest rate
Ability to finance repairs and closing costs into the loan
No maximum purchase price

Do you qualify?

Home must be located within a designated geographical area.
Eligible property types include existing and new construction single-family homes and condominiums
Household income must not exceed the adjusted income limit for the area
You must be a citizen, permanent resident or qualified alien

If you're wondering if you and your proposed property qualify for a USDA Rural Development loan, contact an Amerifirst branch close to you or send us a message. One of our friendly loan officers will be happy to give you more details about it. We're always happy to help!

Compare the USDA Rural Development Loan and the FHA Loan - two popular options for first-time homebuyers.

Wondering what it takes to buy your first home? Download our free Get Mortgage Ready eBook.

Tips to Save on Your Homeowner's Insurance

Home insurance premiums can make up a big chunk of the annual expenses of a family. Insurance rates change every year, and in many cases the premiums go up. We all know that there are several variables that determine which banks will lend us money, how much insurance companies will charge us for coverage, and what qualifies a buyer. There are four main variables that may affect your home insurance rate:

Home Maintenance Tips for Winter

Sure, spring cleaning sounds great. However, in reality, tackling a long home maintenance checklist all at once can be overwhelming. Rather than letting it all add up, what if you tackled home maintenance a little each season? Here are some ideas for taking care of your home during the winter months.

Tips for Paying Off Your Mortgage Faster

There are several ways to pay off your mortgage faster and save on interest payments. Even better, not all methods require spending a lot of extra money! Take a look at the list below: Make extra principal payments. You can pay extra money toward your mortgage balance each month or make a larger, lump sum payment on your principal each year. This reduces the amount due on the mortgage as well as reducing the amount of interest that will accrue. Extra money can also be added to the principal payment from bonuses, gifts, savings and extra earnings. Just remember to make a note on the check for the money to go towards the principal! Make one extra mortgage payment per year. One of the easiest ways to make an extra payment each year is to pay half your mortgage payment every other week instead of paying the full amount once a month, otherwise known as “bi-weekly payments.” With these payments, an extra payment is made so that the total number of payments that one makes adds up to 13 payments in a year rather than the 12 that would have been made with monthly payments. This adds up to significant interest savings over the duration of a mortgage. You also want to make sure that if your lender accepts this kind of payment they will not charge you a prepayment penalty. Also verify that the bi-weekly payments are being applied to the principal amount and not the interest. Otherwise, you won't notice the savings. Reduce your balance with a lump-sum payment. Have you inherited money, earned a bonus or commission, or sold a large item? You could apply that amount to your mortgage’s principal balance. Another option is any time you have a month where you have that third paycheck, apply that to the principal on your mortgage. This will happen twice a year, adding an extra principal payment to your mortgage loan. While paying down a large debt is nice, it's not a requirement. Consider making sure you have enough to work toward other financial goals, such as an emergency fund, before paying more on your mortgage. However, there are many options you can explore that best fit your budget. You can learn more about buying your first home with our Get Mortgage Ready Guide below.