There’s never a better time to remodel than right now. Applying for a 502 loan is an excellent way to get the money you need, whether you’re improving your dream home or preparing it for the market. Best of all? The process to apply and get funded is fast, simple, and efficient. We’ll show you how!
The USDA created the 502 loan program to give everyone the chance to own a house. Its generous eligibility requirements and low interest rates make home ownership possible for people that may not otherwise be able to afford a purchase. Interested? If so, keep reading to learn more about the 502 loan and how to apply!
Home Ownership Isn’t Just a Dream for the Rich.
What Is a 502 Loan?
The 502 loan is designed to make home ownership a reality for more Americans. It’s a federal loan given out by the U.S. Department of Agriculture (USDA) and targeted towards rural areas. While the USDA oversees the program, it doesn’t micromanage the details of each individual loan.
The USDA sets zones where 502 loans are available. In practice, it’s typically only available in rural areas with populations under 35,000. That means you could be eligible even if you live in the city. For example, some parts of Los Angeles are covered under the program.
Properties receiving funding must be under 2,000 square feet without in-ground swimming pools. Homeowners who recieve a 502 loan may not host income-producing activities at the property and must be buying a home with a lower market value than the loan limit in the area.
The 502 loan is also restricted by income; exact figures vary between regions. Check out this sheet to see the average income limitations in your area.
The USDA doesn’t have a set credit score requirement. You’ll need to contact your local loan agency to figure out what credit score you need to apply. Typically, lenders look for a credit score of at least 640.
Applicants must also:
- Lack safe and sanitary housing
- Can’t obtain other loans
- Use the property as their primary residence
- Be legally able to take out a loan
- Meet citizenship requirements
- Not be denied access to federal programs
Interest rates are based on current market rates, which is determined at either the time of loan approval or closing. The lower of the two is chosen. That means you could have interest rates as low as one percent depending on the specifics of your loan. The payback period is up to 33 years, or up to 38 if your income is too low for that.
How to Apply
First, you should contact your local USDA state office for more specific information and get the process started. They can point you in the right direction in regards to lenders and eligible zones. Here are some tips when searching for lenders.
Shop around as much as possible. There’s a good deal of flexibility in the requirements. Some local banks or credit unions are more generous and willing to loan money than others. The USDA doesn’t dictate the loan terms, so it really comes down to finding a lender with the best deal for you.
You don’t have to be rich to own a home. The USDA makes it possible for anyone to have that opportunity. Contact your local office today and takes steps towards owning a safe, clean home for you and your family!