Many home buyers purchasing property in one of Arkansas semi-rural communities have a great option with the 100% USDA loan. The United States Department of Agriculture & Rural Housing (USDA) still offers 100% financing through approved lenders and banks. The program requires no money down and has very competitive 30-year fix interest rates. In addition to 100% financing, the USDA program costs less overall in regards to reduced mortgage insurance costs, over 50% when compared to the more popular FHA loan.
The USDA program has been around for many years and there have been some adjustments made over the years but the goal is still the same- to provide flexible mortgage options for those in rural or semi-rural areas. Even many locations just outside larger cities like Little Rock, Fort Smith, Fayetteville, Springdale and Jonesboro are still eligible.
Let’s discuss the basic USDA guidelines below:
- Safe fixed interest rate– One of the great advantages of the USDA loan is the fixed 30-year interest rate. Compared to other traditional loans where the interest rates can vary, the interest rate remains the same for the entire life of the loan. No prepayment penalty or adjustable rate terms. This is good because the homeowners can plan out their fixed monthly expenses more easily.
- 100% financing – The Federal government insures or backs USDA loans, and allows 100% financing as a way to help develop and expand rural locations in Arkansas. The USDA mortgage also allows for the seller of the home to pay the buyers closing costs, up to 6%. With that home buyers can generally close on a home with little to NO money out of pocket.
- Simple approval process – Getting qualified and approved for a USDA loan in AR quick and easy. Often times the entire pre-approval process can be done in minutes. There are no special requirements like classes or pre-education for first-time buyers to apply. Buyers just need to ensure they have reasonable credit and income below the max income limit for your County. Contact us to discuss below income limits in more detail.
- No savings requirement – Home buyers are not required to have a certain amount of savings to be approved. Most conventional loans and FHA loans require down payments and savings reserves for buyers to get approved, but not the USDA program. Buyers can also receive gift funds if they choose to put money down.
Additional Information Home Buyers Should Know:
It’s usually the pesky small things that can hurt your credit. If you think your credit needs some work, check it out in advance before you make an application. Keep in mind, your interest rate is tied to your credit score. Buyers with the highest credit scores (over 680) generally receive the lowest interest rate which can save a lot of money in the long run.
As of 2016, a credit score of 620 or better is needed for the 100% USDA loan. If you came out of a bankruptcy or foreclosure, or other financial hardship you would need to have maintained a perfect credit since (3-4 years) regardless of how high your current credit score may be. Remember, a 620 credit score do not guarantee loan acceptance.
Solid review of buyers debt must be done by lenders to ensure the buyer can meet the obligation. Mortgage companies generally don’t want to see buyers total debt load that’s higher than 42 percent for a USDA mortgage approval. Buyers will also need (2) years of consistent employment with large gaps in employment. Not required to be 2 years with the same employer, just in the same line of work.
Home buyers that have questions can contact us at ph: 800-691-8826 or just submit the Quick Contact form on this page for fast service.
Proud to serve home buyers across the U.S. including – Little Rock, Fort Smith, Fayetteville, Springdale, Jonesboro, Conway, Rogers, Pine Bluff, Bentonville, Hot Springs, Benton, Sherwood, Texarkana, Jacksonville, Russellville