FHA and USDA Home Loans Houston – What is the difference between them?

While you think of buying a house in the USA, it is essential to know about these loans. One of the common loan options to the borrowers is USDA. However, FHA loan is also popular to the homebuyers. You may try to make out how these two loans are different from each other. You will be able to apply for the better one for your needs.

The loan scheme under US Department of Agriculture is for the low-income Americans and for the Americans in the rural sector. The terms for USDA Home Loans Houston can range between thirty and thirty-eight years.  While you apply for the guaranteed USDA loan, you have a chance of enjoying 100% financing. In this loan program, the standards for credit and income-related qualifications are different. However, when you have moderate amount of income, you have a chance getting approval for the loan. The house, purchased with this loan, has to be very modest in cost, design and size.

Citizenship-

USDA- To apply for USDA loan, you have to be a permanent alien or American citizen.

FHA- You must be a legal American resident, and you should have SS number.

Credit score-

USDA- As one of the USDA loan applicants, your credit score must be minimum 640.

FHA- Most of the lenders have set 620 as the minimum score. However, they always make sure that you have a clean and positive credit record in the past twelve months.

Down payment-

USDA- Lots of homebuyers look for Zero Down Home Loans, and for them, USDA loan is the right choice.

FHA- In most case, the down payment for this loan is 3.50%. This down payment is much lower than what we have found in other types of home loans.

Geographic restrictions-

USDA- For this loan, you have to make sure that your chosen house is in the USDA-entitled rural regions. In some American states, these regions are adjacent to the metropolitan sites. There are also various income limits for different geographic regions.

FHA- To get this loan, there is no restriction-related to the geographic sites. However, the loan limits may vary in different regions in the USA.

Which is the better loan for you?

Lots of homebuyers do not have the capacity of making 20% percent down payment. For them, both the loans are the best options. However, USDA loan applicants have to ensure the location of the house in the rural regions. Another good aspect of both the loans is that there is no strict requirement for higher credit scores. One demerit of FHA loan is that the mortgage insurance and interest rates are higher. For the USDA loans, the interest rate is not much high, and it is one of the advantages of the property buyers.