Evanston, IL USDA Loans VS FHA Loans

Evanston, IL USDA Home Loans vs Evanston, 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 Evanston, 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.

Evanston, IL USDA Home Loans

1. What it is: The Evanston, 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.

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

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

We service the following areas for FHA and USDA loans.

Learn more about Evanston, Illinois

Evanston (/ˈɛvənstən/ EV-ən-stən) is a city in Cook County, Illinois, United States, situated on the North Shore along Lake Michigan. A suburb of Chicago, Evanston is 12 miles (19 km) north of Downtown Chicago, bordered by Chicago to the south, Skokie to the west, Wilmette to the north, and Lake Michigan to the east. Evanston had a population of 78,110 as of 2020.

Founded by Methodist business leaders in 1857, the city was incorporated in 1863. Evanston is home to Northwestern University, founded in 1851 before the city’s incorporation, one of the world’s leading research universities. Today known for its ethnically diverse population, Evanston is heavily shaped by the influence of Chicago, externally, and Northwestern, internally. The city and the university share a historically complex long-standing relationship.

Prior to the 1830s, the area now occupied by Evanston was mainly uninhabited, consisting largely of wetlands and swampy forest. However, Potawatomi Native Americans used trails along higher lying ridges that ran in a general north–south direction through the area, and had at least some semi-permanent settlements along the trails.

French explorers referred to the general area as “Grosse Pointe” after a point of land jutting into Lake Michigan about 13 miles (21 km) north of the mouth of the Chicago River. After the first non-Native Americans settled in the area in 1836, the names “Grosse Point Territory” and “Gross Point voting district” were used through the 1830s and 1840s, although the territory had no defined boundaries. The area remained only sparsely settled, supporting some farming and lumber activity on some of the higher ground, as well as a number of taverns or “hotels” along the ridge roads. Grosse Pointe itself steadily eroded into the lake during this period.

In 1850, a township called Ridgeville was organized, extending from Graceland Cemetery in Chicago to the southern edge of the Ouilmette Reservation, along what is now Central Street, and from Lake Michigan to Western Avenue in Chicago. The 1850 census shows a few hundred settlers in this township, and a post office with the name of Ridgeville was established at one of the taverns. However, no municipality yet existed.