Arcola, IL USDA Loans VS FHA Loans

Arcola, IL USDA Home Loans vs Arcola, IL 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 Arcola, IL 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.

Arcola, IL USDA Home Loans

1. What it is: The Arcola, IL 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 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.

Arcola, IL 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 Arcola 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 Arcola, IL 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 Arcola, IL 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 Arcola, IL  have income caps which could rule out higher earners, while FHA loans in Arcola do not.

To make the best decision, consider speaking with a mortgage professional who can provide advice tailored to your situation. Both Arcola, IL  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 Arcola, IL USDA and FHA loan options? Call today (888)416-4805.

We service the following areas for FHA and USDA loans.

Learn more about Arcola, Illinois

Arcola is a city in Douglas County, Illinois, United States. The population was 2,927 at the 2020 census. The city was founded in 1855, when the Illinois Central Railroad was built through the county. The railroad itself was responsible for surveying, platting and founding the town.

Arcola was the birthplace in 1880 of John Barton Gruelle, or “Johnny” Gruelle, who created Raggedy Ann and Raggedy Andy, the loveable American dolls and storybook characters. He used artistic skills learned from his painter father, Richard Buckner Gruelle, combined with his self-taught writing skills to create stories expressing regional values and aesthetic images. His artistic granddaughter, Joni Gruelle Wannamaker, manages the Raggedy Ann Museum in Arcola.

A nationally known tourist attraction, Rockome Gardens, which featured large formal gardens, concrete fencing and architecture, and many Amish-influenced attractions was located just outside of Arcola. Rockome Gardens was built in 1937 and was operated for nearly 80 years by members of the local Old Order Amish community. In 2015, the Rockome Gardens property was sold to a local developer and has since been converted into Aikman Wildlife Adventure, a drive-through wildlife park which officially launched in 2016.

Arcola is also known for housing the world’s only Hippie Memorial, created by Bob Moomaw, who died in 1998. He worked as a railroad clerk and tax assessor, but did not like either job. As an eccentric, independent artist with strong beliefs, he was able to give voice to his feelings, passions and opinions through his art and the writing on the sides of his buildings. He created the 62-foot-long artwork starting in 1992 to say something about his life and the era during which he lived. A nearby marker gives an interpretation of his work.

In the countryside surrounding nearby Arthur, Illinois, is a prominent community of Old Order Amish, the largest in Illinois. Amish farms occupy much of the farmland west of Arcola, with the highest concentration of Amish businesses around Arthur and the unincorporated communities of Chesterville, Bourbon, and Cadwell. Arcola is home to the Illinois Amish Interpretive Center. The Old Order Amish Museum opened in 1996 and features exhibits on most aspects of Amish life, as well as an introductory video about the Central Illinois Amish. Through the museum, tours can be scheduled of the Amish countryside, Amish homes, farms, and businesses; meals in Amish homes can be scheduled as well.