Those looking for a low to no down payment mortgage have options. From VA loans to HomeReady Loans to loans only available via the state, there are many different mortgages available for those who do not have the traditional 20% down payment.
The most common of these home loans is the FHA loan, backed by the Federal Housing Authority. But there is another type of loan available that you may want to consider – the USDA loan.
Where USDA Loans Beat FHA Loans
USDA loans are available in what are considered “rural areas.” These may include some cities that are not traditionally considered to be rural, but are listed that way by the USDA. Compared to FHA Loans, USDA loans may have several advantages, including:
These advantages make USDA loans an intriguing choice when both are available in the area.
Where FHA Loans Beat USDA Loans
Although USDA loans do have many advantages, they are imperfect. There are several advantages that FHA has over USDA, including:
While this may not seem like many advantages, those that are moving into the city, and those that make a higher income, may find that they simply do not qualify for USDA loans, and FHA is the only option.
Which is Better?
USDA loans seem to have more advantages for borrowers, but determining which is better is going to depend a little on the house you want, your income, where it is located, and potentially some of the more specific debt and payments you receive. To learn which loan is right for you, contact Open Mortgage today.
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