Idaho is quite the agricultural state and the state’s biggest city, Boise, is no exception. Between 2002 and 2007 the number of farms in Boise went to 105 from 89 according to the U.S. Census of Agriculture. With crop sales accounting for 75 percent of products sold and livestock sales accounting for 25 percent, Boise farmers keep busy.
Undoubtedly, there are Boise farmers using USDA loans to finance their homes. Part of the Rural Home Loan program, USDA loans offer several benefits and favorable terms to prospective homebuyers. The title of the program often misleads homebuyers into thinking they need to be farmers to be eligible. However, this is no longer a requirement. Although farmers may still be eligible for a USDA loan, people seeking a home in a certain area may also be eligible.
Eligible areas include open country that is not associated with an urban area. Towns, cities and villages with fewer than 25,000 people may be eligible too, especially if they are far from an urban area, not included in a Metropolitan Statistical Area and lack mortgage credit. USDA loan borrowers’ income must fall within specified parameters as well. Borrowers’ income cannot be higher than 115 percent of the area’s median income. The USDA also decides if the sought after home is a reasonable size for the family, based on the number of people who will live there. Plus, the family must currently live in inadequate housing, meaning it is unfit because for the size of the family.
The Rural Home Loan program’s financial advantages are plenty. USDA loans in Boise come with no down payment. Other than a few other federal loan programs, no mortgage option has such a feature. More benefits of USDA loans include:
-Combining the 2 percent funding fee into a loan, making it 102 percent of the home’s value
-No private mortgage insurance cost every month
-Loan lives as long as 38 years with fixed rates
-Getting legal fees and closing costs lumped into the loan
-Financing the purchase, construction, repair, renovation or refinancing of a property
Like other government programs, the federal government does not issue the loan. Instead, the USDA guarantees part of each loan to protect lenders from an unlikely default. Consequently, the USDA does not have specific financial requirements. USDA-approved lenders do have some preferences, though.
These lenders calculate the cost of the loan divided by gross monthly income to determine whether a family can afford a USDA loan in Boise. If the resulting quotient is higher than 29 percent, the family won’t qualify. Similarly, lenders’ preferred credit score is 620 or higher. Another quotient—the debt-to-income (DTI) ratio—must be 41 percent or lower. DTI ratios are the quotient of total debt divided by gross monthly income.
With a niche in agriculture, Boise farmers are essential to the industry. They deserve a home and a financing option they can afford. USDA loans serve a niche that’s just as important the farmers who use them.
Written and shared by Kevin Pearia