Afton, MN USDA Home Loans vs Afton, MN FHA Home Loans: Which is Right for You?
Homeownership is a dream for many people. To make it achievable for a wider range of individuals, there are various mortgage programs available. Among the most popular are USDA Home Loans and Afton, MN FHA Home Loans. Both of these loan programs aim to assist buyers, especially those with low-to-moderate incomes, but they serve different populations and have distinct criteria. Let’s delve into the differences and similarities of these two loan types to help you decide which one might be right for you.
Afton, MN USDA Home Loans
1. What it is: The Afton, MN USDA Home Loan program is backed by the United States Department of Agriculture (USDA). It’s designed to help rural residents, especially those with lower incomes, purchase homes.
2. Eligibility:
- Location: Homes must be located in eligible Afton, MN rural areas as defined by the USDA.
- Income limits: There are maximum income limits, which vary based on the size of the household and the county in which the property is located.
- Credit score: While the USDA doesn’t have a set credit score requirement, most lenders require at least a 640 score.
3. Benefits:
- No down payment: USDA loans allow for 100% financing.
- Competitive interest rates: Often lower than conventional loans.
- Low mortgage insurance: The upfront guarantee fee can be rolled into the loan, and the annual fee is generally lower than FHA mortgage insurance.
4. Limitations:
- Geographic restrictions: The program is limited to certain rural areas.
- Income caps: Not suitable for those with higher incomes.
Afton, MN FHA Home Loans
1. What it is: FHA Home Loans are backed by the Federal Housing Administration (FHA). This program aims to help those with low-to-moderate incomes and Afton, MN first-time homebuyers purchase homes.
2. Eligibility:
- Credit score: Borrowers need a minimum credit score of 580 to qualify for the 3.5% down payment. Those with scores between 500-579 can still qualify but will need a 10% down payment.
- Debt-to-Income Ratio (DTI): Generally, the ratio should be less than 43%, but exceptions can be made with compensating factors.
- Mortgage Insurance: Borrowers are required to pay both an upfront and an annual mortgage insurance premium.
3. Benefits:
- Low down payment: Requires only 3.5% down with a 580 credit score.
- Flexible credit requirements: Suitable for those with lower credit scores.
- Assumable mortgage: An Afton, MN FHA loan can be assumed by a future buyer, which can be a selling point in a rising interest rate environment.
4. Limitations:
- Mortgage insurance: FHA loans come with both upfront and ongoing mortgage insurance premiums.
- Loan limits: There are maximum loan amounts, which vary by county.
Which is Right for You?
Your decision between a USDA Home Loan and an Afton, MN FHA Home Loan will largely depend on your individual circumstances:
- Location of Desired Property: If you’re looking at a home in a rural area, the USDA loan might be the best fit. If you’re considering urban or suburban areas, an FHA loan may be the only option among the two.
- Down Payment: If you don’t have a down payment, a USDA loan, with its 100% financing, can be attractive.
- Credit Score: If you have a lower credit score, the FHA loan might be more forgiving.
- Income: Remember that USDA loans in Afton have income caps which could rule out higher earners, while FHA loans in Afton, MN do not.
To make the best decision, consider speaking with a mortgage professional who can provide advice tailored to your situation. Both Afton USDA and FHA loans offer opportunities for homeownership, but the right one for you will depend on your personal and financial circumstances. Questions about the Afton, MN USDA and FHA loan options? Call today (888)416-4805.
We service the following areas for FHA and USDA loans.
Learn more about Afton
Afton (/ˈæftən/ AF-tən) is a city in Washington County, Minnesota, United States. The population was 2,886 at the 2010 United States Census. It lies on a small bay where Valley Creek empties into the St. Croix River, several miles north of its confluence with the Mississippi River.
Afton is well known for Afton Alps, the largest ski and snowboard area in the Twin Cities metropolitan area. It is home to Afton State Park on the St. Croix River. Due to these two destinations and its quaint small-town appearance in a major metropolitan area, Afton receives a fair amount of local tourism in the form of day trips. The 2018 US Winter Olympic Gold Medalist cross-country skier Jessie Diggins is from Afton.
The first settlers in the area arrived in 1837. The settlement of Afton was platted in 1855, with the name chosen from a poem (Sweet Afton) by Robert Burns. A post office has been in operation at Afton since 1857. The city contains three properties listed on the National Register of Historic Places: the 1856 Erastus Bolles House, the 1864 Newington Gilbert House, and the 1867 Cushing Hotel.
The city has a total area of 26.42 square miles (68.43 km2); 25.05 square miles (64.88 km2) is land and 1.37 square miles (3.55 km2) is water. Main routes include Hudson Road, County Roads 18, 21, and 71; and Minnesota Highway 95. Afton borders Lake St. Croix Beach, Lakeland, and St. Mary’s Point to the east. It also borders West Lakeland Township to the north, Denmark Township to the south, and Woodbury to the west.
As of the 2010 United States Census, there were 2,886 people, 1,081 households, and 863 families in the city. The population density was 115/sqmi (44.4/km2). There were 1,143 housing units at an average density of 45.6/sqmi (17.6/km2). The racial makeup of the city was 93.3% White, 0.7% African American, 0.4% Native American, 4.3% Asian, 0.1% Pacific Islander, 0.6% from other races, and 0.7% from two or more races. Hispanic or Latino of any race were 1.7% of the population.