USDA Loans vs. FHA Loans - A Quick Comparison

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USDA Loans vs. FHA Loans

One of the most difficult parts of buying a home is deciding on the right kind of loan for your particular situation. With all of the options, it can become very frustrating to sort through the details. Two types of loan that you may have heard about are an FHA loan and a USDA loan. While these are not the same thing, there are some similarities--but there are differences too. We’ve done the hard work for you and put together some basic information about the loans so you can compare and contrast.

What Do the Loans Have in Common?

Both the FHA loan and the USDA loan are excellent options for those looking to borrow who may have trouble saving a large down payment. Both have small or nonexistent down payment requirements. Also, qualifications may be a bit easier for lower income borrowers than a traditional loan.

What Makes an FHA Loan Unique?

The FHA loan, which is a part of the Federal Housing Administration program, doesn’t usually have area restrictions, although certain properties may not qualify for other reasons. In addition, qualifications as far as credit level and debt-to-income ratio may be a bit stricter for FHA loans than USDA loans.

What Makes a USDA Loan Unique?

The USDA loan program, offered by the United States Department of Agriculture, is designed to boost interest in rural areas. As such, the loan is only available for certain properties. This requirement doesn’t mean that you are limited only to farmland, many suburban and semi-rural communities qualify. USDA loans do have an income cap, and the organization targets it towards those with lower incomes. 

With this information, you can start choosing what type of home loan will fit you best. However, it is always recommended to discuss this big decision with an expert. Reach out to us at First Liberty Mortgage, and we would be happy to help. We have extensive experience with both FHA and USDA loans and can assist you every step of the way.

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