USDA Insured Loans
We love that many areas throughout our footprint are rural, which are excellent opportunities for USDA loans. USDA home loans are guaranteed by the United States Department of Agriculture as part of their Rural Development program. USDA loans are meant to encourage homeownership in small communities across the U.S. by offering low-interest, low-down-payment mortgages to borrowers with low to moderate incomes.
Features of USDA Insured Loans
These are the features that make USDA loans unique:
- Insured by the United States Department of Agriculture (USDA)
- Loan must be used for a primary residence
- May have zero down payment requirements based on your income1
- Property must be in a rural area (in an area having fewer than 35,000 residents)
How Do USDA Loans Work?
The joys of rural living are within your reach with a USDA loan. If you qualify, you'll obtain a federally insured loan with a low interest rate and zero down payment. There are three separate USDA loan programs:
1. Direct loans: Direct loans give very low- and low-income applicants a low interest rate and payment assistance for a brief period. The amount of assistance you're eligible to receive depends on your income level.
2. Loan guarantees: A loan guarantee ensures the lender that the USDA will reimburse a portion of its losses from a default. These loans feature low rates and little to no money down but include an insurance premium.
3. Home improvement loans: Qualified borrowers can access a loan or grant to fund home improvements and repairs.
Benefits of USDA Loans
A USDA loan is one of the best options for a low-income individual or family hoping to purchase a primary residence.
When you secure a USDA loan for your home, you can fund your purchase without making a down payment. Rather than saving a lump sum to put toward your initial purchase, you can save your money and use it for monthly payments.
Additionally, USDA loans offer competitive interest rates, allowing you to pay less over time than you would with a conventional loan. Ultimately, a USDA loan will give you access to affordable housing so that you can start building equity in your home and your future.
USDA Loan Eligibility
Eligibility for a USDA loan depends on your income and location. You can check the USDA's interactive map to see income limits in counties throughout Pennsylvania and Ohio. USDA loans are for very low-, low- and moderate-income borrowers.
In addition to income, USDA loan eligibility depends on the type of property. You can use a USDA loan to buy a residential property that you intend to use as your primary residence. The property must be in a rural area, though some suburban opportunities exist.
Additional requirements include:
- United States citizenship.
- 71% income availability after monthly mortgage payments.
- 41% debt to income ratio aside from the loan.
- 24-month income history.
- Acceptable credit with no accounts sent to collections in the past 12 months.
Applying for a USDA Loan
You can apply for a USDA loan through a participating lender like First Commonwealth. Follow these steps to apply for a USDA loan with us:
- Open an account.
- Request mortgage pre-approval.
- Locate an eligible home.
- Secure underwriting approval.
- Request final loan approval.
- Close on your home and begin paying monthly.
Request a USDA Loan
Ready to apply for a USDA loan in Pennsylvania or Ohio? We're here to help. We invite you to schedule an appointment with one of our advisors to see if a USDA loan is right for you.
1 Some exclusions apply and will be explained during the application process.