When deciding on a loan product to finance a mortgage on a home, many people will clearly choose the loan that costs them less. Associates Home Loan of Florida has helped customers compare USDA and FHA Loans. In this week’s blog, we are here to share some helpful tips on the two different loan programs. It has been said by some that if you can qualify for a USDA mortgage, it might cost you less than an FHA Loan. Still, it is important to thoroughly understand these two loan programs before you decide.
The US Department of Agriculture created the USDA Loan Program. A unique feature of this program is that it has zero-percent down payment options to purchase homes that are located in USDA eligible areas. Many borrowers of USDA loans do not have enough income or assets to obtain a traditional mortgage. Usually, interest rates for USDA loans are very low, as they are designed for less wealthy homebuyers. Income limits to qualify will vary by location and household size. You must be a U.S. Citizen, obtain a reasonable monthly payment amount for your income, and have an acceptable credit history. In fact, if you have a better way to show consistent income and a good credit score, you may qualify for a streamlined mortgage process.
Created in the Great Depression, FHA Loans were made to improve access to mortgage financing for many people living in the United States. After the struggle of the Great Depression, many did not have the income to cover home down payments or costs.
FHA Loans typically require a lower down payment and have easy qualifications for credit. However, a better credit score may lower your down payment requirements. With an FHA Loan, there are requirements to live in the FHA-insured home as a primary residence. There are also requirements to demonstrate the ability to pay for mortgage payments, other expenses, and to show a steady income. As with the USDA Loans, the FHA Loans can be helpful thanks to the minimal requirements to qualify compared to other mortgages.
Get Help to Make the Right Choice
Many will say that if you live in a USDA Loan eligible area, have a good credit score, and can qualify for a USDA Loan, then you should go with this option as long as it costs less. However, you may live in a USDA area but your credit score may be too low. You may also have an income that exceeds the USDA limits. In this scenario, you should try to qualify for the FHA Loan.
Luckily, we can help you learn if you qualify and obtain some estimates for various mortgages. Associates Home Loan of Florida agents have helped many Florida homeowners compare USDA Loans versus FHA Loans. We happily serve the Tampa Bay area, so call us today!