Overview: Top 6 Tips to Finding USDA Mortgage Rates Today
Shopping for a new home can be extremely exciting, but also very intimidating.
Mortgages and real estate are complicated, and it can be difficult to know which loan is the best for your own situation. Many people do not know that the United States Department of Agriculture, or USDA, offers home loan programs.
Most people’s primary concern when looking for a mortgage is finding the loan with the best rates for however long they plan to live in their new home. A few questions people ask when looking into USDA loans are:
- Are USDA loan rates different from traditional mortgages?
- Is a USDA loan best for me?
- What can I do to find USDA mortgage rates today?
It is impossible to make an informed decision about which mortgage is right for you without all of the relevant information. The mortgage application process can be lengthy, difficult, and confusing, but finding the information you need to make a good decision should not be.
Because the USDA loan program is still relatively unknown, finding USDA home loan rates can be difficult. But armed with the right tools and tips, there is no reason that you should not be able to find all of the information about USDA loans and USDA loan rates today or any day that you choose.
1. Understand what makes USDA mortgage rates unique
Not every mortgage is right for every consumer. Different kinds of home loans offer different advantages and restrictions. In order to find the best USDA mortgage rates for your particular situation, it is important to understand the pro and cons of what makes USDA loans unique.
The USDA loan program was designed to help make homeownership in rural areas more affordable. USDA loans are backed by the United States government and offer more protection to lenders. Because lenders have more protection from defaulting loans, they are able to offer lower mortgage insurance premiums and lower-than-average interest rates.
One of the most appealing things about a USDA loan is that, for eligible buyers, it requires no down payment. The program also allows qualified borrowers to finance 100% of their property value. These two factors paired with low USDA rates make these loans very attractive.
USDA loans do have some restrictions. Properties must be owner-occupied and used as a primary residence. This means that investment properties or vacation homes do not qualify. Also, to use a USDA loan, a property cannot have any features that might be used to generate income, so working farms are excluded from the program.
USDA loans are also limited by geography and income restrictions. A property must be located in what is legally considered to be a rural area. This can make it unattractive to some borrowers.
However, this is more inclusive than it might sound because 97% of the United States is considered to be rural, thus qualifying for the USDA loan.
Map from USDA
USDA loans are also restricted by income maximums and minimums. A potential borrower must fall within a particular income range based on the median income of the surrounding county. This restriction will automatically disqualify some applicants but could be resolved in some situations by moving your house hunt a few counties over.
2. Different kinds of loans will affect USDA interest rates
One of the most important things to keep in mind when calculating USDA mortgage rates is that different kinds of loans will be paired with different rates. There are a wide range of USDA mortgages and loans available depending on your individual needs and situation.
Some USDA loan rates are determined based on your personal credit profile, some rates are fixed for all applicants, and some USDA loan rates can be altered based on other forms of government aid.
There are three types of loans offered by the USDA:
- This is available to low- and moderate-income households.
- This loan has a limited guarantee from the U.S. government, meaning that it will cover 90% of the cost of the loan if the buyer defaults on payments to the lender. This makes the loan low risk and attractive to lenders, encouraging them to keep USDA loan rates low.
- If you apply for this loan, it will be calculated based on your credit profile. The rate is not fixed by the government and is not uniform for all borrowers.
- This is available to low- and very low-income households.
- USDA loan rates for the direct loans are fixed at the time of either loan approval or loan closing. The USDA interest rates for this kind of loan are based on market rates at the time of either approval or closing, whichever rate is lowest.
- Payment assistance programs are available to be paired with this kind of loan. These programs can make USDA interest rates as low as 1%, regardless of the current market.
- As of September 1, 2016, USDA mortgage rates for Single Family Housing Direct Home Loans is expected to be 2.875% for low- or very low-income borrowers.
Rural Repair and Rehabilitation Loan
- This loan is designed to help very low-income homeowners in rural areas repair and update their current homes.
- This loan also covers government grants for senior homeowners who meet certain qualifications to repair their existing dwellings.
- USDA loan rates for this kind of loan are currently fixed at 1%.
3. An approved lender can help you find USDA interest rates
If you are interested in a USDA loan, note that not all lenders are equal. The USDA has published a list of lenders who have been approved to offer USDA loans. If a lender is not on the list, it is unlikely that they will be able to provide you with any helpful information.
Contacting an approved lender is a great way to find concrete information on USDA interest rates today. You can request a quote based on your own financial information that will give you a realistic idea of what kind of USDA loan interest rate you can expect to be offered.
If you work with a major company, you may be able to request a quote online. However, any lender will allow you to request a quote over the phone. Quoted rates are not guaranteed, but a lender will offer their best estimation as to what you can expect with your particular loan, your particular finances, and today’s housing market.
USDA mortgage rates are subject to change. They change as the market fluctuates and as the Department of Agriculture updates their rates.
It is possible to access average USDA mortgage rates today, and really any day for that matter, in real time to reflect these fluctuations. Many real estate companies and mortgage firms will publish average USDA loan rates to give prospective clients a realistic idea of what to expect as they move forward in the mortgage application process.
Be sure to look for dates attached to USDA mortgage rates as this will give you a good idea if the numbers quoted are current or too old to help you with your research.
4. Use the USDA resources
There is a lot of information available concerning USDA loans and USDA interest rates through the Department of Agriculture itself. Since the program originated with the department, they have made huge efforts to make information available and accessible to interested prospective homeowners.
Image from USDA Programs & Services
Since restrictions and qualifications vary between states, the website has sections dedicated to each state for your convenience. You can browse state by state, which makes it is easy to find the restrictions and qualifications that apply to your particular needs.
Because USDA loans are restricted to only rural areas, the website includes a mapping system that shows up-to-date information regarding rural zoning. This allows potential homeowners to see exactly which areas qualify and which areas do not.
The USDA website can provide many answers to questions people might have about the nature of USDA loans and USDA interest rates.
However, if you have questions that the website cannot answer, there is a contact list of representatives according to each state complete with names, phone numbers, street address, and email so that you can easily and quickly contact a USDA representative with questions about the USDA loan rates today.
5. USDA interest rates are affected by your finances
Like most mortgages, your personal finances determine a big part of your USDA loan interest rate. The more in touch you are with your finances, the easier it will be to determine what kind of USDA rate you can expect. Market averages can be a very helpful tool but will not shed much light on your personal situation.
A good way to expedite the search for USDA interest rates today is to have a good understanding of your credit profile. The information that you will need to provide for your search is pretty basic. However, the more information that you are able to provide, the better your search for USDA rates will be.
Many different factors contribute to how your lender will calculate your USDA interest rates. The most important will be your overall credit profile. This includes your debt to income ratio, credit score, and your bill payment history. Your USDA home loan rate will, mostly likely, directly correlate with the level of desirability captured in your credit profile. In other words: the better your credit, the better your USDA mortgage rate will be.
You will need to provide financial information to any one who is calculating a USDA home loan rate quote. This will be true for a mortgage calculator, an approved lender, or any other qualified professional providing you with a quote or estimate. If you are familiar with your financial situation and can provide information like a credit score, income, monthly payments, and the total amount of your prospective loan, then it will be much easier and quicker to get an accurate estimate for your USDA loan rate today.
6. The housing market affects USDA interest rates
Your personal finances determine a lot about how your USDA interest rate is calculated. But, the other side of that coin is the housing market at large. An understanding of the housing market, its fluctuations, averages, and influences will be very helpful in your search for USDA interest rates today.
All USDA rates are guaranteed, which means that your payments will never balloon or change unless you refinance. Though your rate might not change once you have closed on your loan, the rate that you are offered is subject to change all the time. The USDA loan rates offered in April of 2015 may be very different than the ones offered just one year later. This can make knowledge of USDA rates and market fluctuations helpful as you plan your house hunt and mortgage search.
Image from Lendasaurus
You do not need to be an economist to find these trends. Some websites offer graphs and charts to help illustrate how USDA loan interest rates have changed over time. These tools can be used to help you see what rates are in real time, and they are updated frequently so that you can have an up-to-date idea of what average rates are.
There are also websites that can allow you to look at the history and fluctuations of USDA mortgage rates. These websites can help consumers understand rate fluctuations and trends by showing them USDA mortgage rates today and in the past. This can help prospective buyers plan for the future because not all USDA loan rates are fixed or guaranteed and may change if closing or construction dates are moved back.
Conclusion: 6 tips for finding USDA loan rates today
House hunting and searching for mortgages can be a lengthy, drawn out process. Being able to understand and find accurate USDA interest rates today can be a huge relief as you navigate through the confusion. Armed with the right knowledge and tips, you can make decisions about USDA mortgage rates with confidence.
Keep our six tips in mind:
- Know what makes USDA loans different
- Understand the three kinds of USDA loans
- Find an approved lender
- Use the USDA resources
- Understand your finances
- Look at the market
Keep in mind that, just like each borrower, not all mortgages are alike. Each has advantages and disadvantages that may or may not work for you. That is why it is so important to understand how different home loans work and the details of your own financial situation.
Most interest rates can only be guaranteed once you have applied and been approved for a mortgage by an approved lender. Unless your loan comes with a uniform rate, anything else is just a best guess. But these educated guesses can help you form a realistic idea of what kind of mortgage will be best for you now and in the future.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.