Owatonna, MN USDA Home Loans vs Owatonna, 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 Owatonna, 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.
Owatonna, MN USDA Home Loans
1. What it is: The Owatonna, 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 Owatonna, 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.
Owatonna, 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 Owatonna, 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 Owatonna, 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 Owatonna, 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 Owatonna have income caps which could rule out higher earners, while FHA loans in Owatonna, MN do not.
To make the best decision, consider speaking with a mortgage professional who can provide advice tailored to your situation. Both Owatonna 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 Owatonna, MN USDA and FHA loan options? Call today (888)416-4805.
We service the following areas for FHA and USDA loans.
Learn more about Owatonna
Owatonna (/ˌoʊwəˈtɒnə/ OH-wə-TON-ə) is a city and the county seat of Steele County, Minnesota, United States. The population was 26,420 at the 2020 census. Owatonna is home to the Steele County Fairgrounds, which hosts the Steele County Free Fair in August.
Interstate 35 and U.S. Highways 14, and 218 are three of the main routes in the city.
Owatonna was first settled in 1853 around the Straight River. The community was named after the Straight River, which in the Dakota language is Wakpá Owóthaŋna. A popular, but apocryphal, story is that the town is named after “Princess Owatonna”, the daughter of local Native American Chief Wabena who was supposedly healed by a nearby spring’s magic waters, which were said to be rich in iron and sulfur. The earliest the Owatonna area was settled was in 1854. It was platted in September 1855, incorporated as a town on August 9, 1858, and as a city on February 23, 1865.
In 1856, Josef Karel Kaplan emigrated from the village of Dlouhá Třebová, southeast of Prague, Bohemia (now the Czech Republic), and selected a quarter section [160 acres (65 ha)] of land near the town of Owatonna. Kaplan described Owatonna as having just 50 small homes, but predicted 100 within a year, along with a railroad. With just four stores and a pharmacy, Owatonna quickly prospered and grew to 1,500 inhabitants in just 5 years. Kaplan wrote about the Owatonna area in letters donated to the Minnesota Historical Society. In them, he described often seeing the indigenous people with “tough constitutions…brown skin and good dispositions”, adding: “When you read about battles between whites and Indians, it is the whites who are to blame.” In 1866, Kaplan helped organize the Catholic cemetery, and a year later, the Bohemian National Cemetery of Owatonna.
Kaplan’s Woods is part of the land originally owned by Josef Kaplan, and later Victor and Anna Kaplan. The State of Minnesota created Kaplan’s Wood State Park, which was later transferred to the City of Owatonna. The Kaplan’s Woods Parkway contains over 6 miles (10 km) of hiking and cross country skiing trails, and nearly 2 miles (3 km) of hard-surfaced, handicapped-accessible trail. The parkway includes Lake Kohlmier, a 35-acre (14 ha) lake.