Constitution. It’s also called “The Diamond State” by Thomas Jefferson because of its strategic location along the Eastern Seaboard. With all the great things about Delaware, it’s no surprise that the number of people looking to move to the state is increasing. If you’re one of those people that is planning to move to the state but also wanting to live in wide open rural areas, then you should know about the USDA construction loan near me.
What is a USDA Construction Loan?
USDA Construction Loans are loans that are backup up by the United States Department of Agriculture. These loans are open to the masses, and are very helpful especially to the low-to-moderate income families because of its zero down payment scheme. USDA construction loan is just one type of the available USDA Home Loans Delaware. The other loan types have the applicants buy pre-existing houses, while a USDA construction loan near me has them buy only the land, and have them build the house later.
What are the requirements of a USDA construction loan?
Credit requirements – The USDA does not have a credit score requirement put in place, but lenders do. The minimum credit score lenders require for these loans is 640.
Loan Income Requirements – A requirement of USDA home loans is that applicant income should not exceed the adjusted median income (AMI) in the area or state. Usually the limit set on this requirement is 115% of the area or state’s AMI.
Loan Property and Location Requirements – Properties to be purchased with USDA Home Loans Delaware should be within USDA-approved rural areas, and they must be used for primary residence only. Any additional houses would not be financed anymore by the USDA through this loan.
What’s the catch?
Construction loans at first glance really feels like a good package. Being able to merge the construction and house loan into one is really a good deal when you think about it. But with all the positives of the loans out there, it’s good to acknowledge the downsides too. Doing so ultimately helps you with your final decisions on choosing the right loan for your needs.
A USDA construction loan near me can cost more than other mortgages in the long run. Even though no down payment is required from the applicant, they would still need to pay PMI. These loans, with their package-like nature, also have higher interest rates. Though, this can be lowered over time. Another downside for this loan is its rarity. Not many lenders offer this loan also due to its package-like nature.