Maine is an U.S state with very low population and much of the ‘Pine Tree State’ is covered with forest lands. If you are living in Maine, New England and have been thinking of buying a home, you must be flooded with loan options. VA, FHA, conventional loans – choosing the right loan program can be daunting as well as confusing. Don’t worry. You are lucky to have USDA providing low-cost insured home mortgages in Maine. USDA home loans are ideal for you, if you want to buy a home with zero down payments. USDA loans are very suitable for first time buyers, since it requires no down payments. USDA also offers low closing costs and the most flexible payment options.
To understand the comparable benefits of USDA loans compared to other loan programs, you should have a detailed knowledge about USDA loan programs. We’ll help you get the details of the USDA loan programs.
USDA Home Loans
USDA, the United States Department of Agriculture offers affordable home loans for low income families. USDA provides 100% financing for buying or building a home in USDA approved areas of Maine. Currently, USDA offers two types of loan programs namely:
- Guaranteed Rural Housing Loans: This loan program is the most popular and provides 100% financing for people with higher income limits. Applicants having a monthly income equal to or below 115% of AMI (area median income) are eligible to get loans under this program. All the guaranteed loans under USDA are fixed rate loans with 30 year terms.
- Direct Rural Housing Loans: Less popular than guaranteed loans, the direct loans are also referred to as section 502 loans under USDA. These loans are available to people who have low to very low income. People having monthly income lower than 50% of AMI are categorized as very low income groups. Those having monthly income between 50 to 80% of AMI are categorized as low income groups.
A Quick Glance at the Benefits of USDA Loans
- Zero Down Payments
- 100% financing
- Low interest rates
- Credit score equal to above 640
- Low mortgage insurance
- Low closing costs
Comparable Benefits of USDA Loans
USDA home loans have many advantages over other loan programs. Here are the major differences between the loan programs:
Eligibility
- Conventional Loans: To get a conventional loan the applicant should have a valid social security number
- FHA Loans: The applicant should be a legal resident of U.S and have a valid social security number
- USDA Loans: The applicant should be a U.S citizen or a qualified alien.
Credit Requirements
- Conventional Loans: the credit requirements vary from lender to lender, but most of them require a minimum credit score of 660.
- FHA Loans: Most of the lender providing FHA loans requires a minimum credit score of 620 and the applicant must have clean credit history for 12 months.
- USDA Loans: Most lenders require a minimum credit score of 640. The credit guidelines are very flexible.
Down Payment Requirements
- Conventional Loans: 5 percent to 20 percent of the total loan amount.
- FHA Loans: 3.5 percent of the total loan amount.
- Conventional Loans: Zero Down payment. This makes the USDA loans very affordable and suitable for first time buyers.
Additional Requirements
- Conventional Loans: The applicant must have a work history for at least 12 months before applying for the loan. The lender would evaluate the assets before approving the loan.
- FHA Loans: The applicant needs to be employed for at least 2 years before being able to apply for FHA loans. A non-occupying co-borrower is allowed within the loan.
- USDA Loans: The property for which the loan is applied should be located in the USDA approved area. No credit waivers are necessary if the applicant has a credit score above 620.
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