USDA loan program benefits in the Charlotte region
The USDA loan program offers many benefits for home buyers in the Charlotte region. Whereas conventional loans required as much as 20% down and credit scores in the 700s, the USDA loan program is truly a breath of fresh air with generous income limits, 30-year fixed rates, flexible credit guidelines and most importantly, 100% loan to value financing. An USDA loan also does not carry PMI (Private Mortgage Insurance) but MIP with a 1% of the loan amount upfront fee and an annual MIP of .35% which is substantially less than PMI.
Benefits of the USA loan program
- No down payment required to purchase a home. The full appraised value of a qualifying home can be financed for 100% loan to value
- 30 year fixed competitive interest rate
- 620 credit score or more
- Closing costs can be financed into the loan if the market value of the home (appraised value) is sufficient. This is a great benefit that has helped home buyers purchase homes with no upfront costs (i.e., down payment and closing costs).
- Expanded ratios of 29/41% that allow the borrower to qualify for “more home”
- No mortgage insurance so monthly mortgage payments are lower than if a conventional or FHA loan is used
- No cash contribution is required from borrower so there is an opportunity to purchase an eligible home with no out-of-pocket expenses
- “Gift” money for closing costs is allowed
- Seller concessions are allowed, i.e., seller paying the buyer’s closing costs
- No loan amount restriction. The loan amount is based on the borrower repayment ability
- No reserve required. Reserves are liquid funds that lenders sometimes require the borrower to have to cover mortgage payments for 60 days or more
- The guarantee fee for the program is rolled into the loan
- Borrowers with non-traditional credit histories may be eligible