Pekin, IL USDA Loans VS FHA Loans

Pekin, IL USDA Home Loans vs Pekin, 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 Pekin, 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.

Pekin, IL USDA Home Loans

1. What it is: The Pekin, 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.

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

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

We service the following areas for FHA and USDA loans.

Learn more about Pekin, Illinois

Pekin (/ˈpiːkɪn/) is a city in and the county seat of Tazewell County in the U.S. state of Illinois. Located on the Illinois River, Pekin is the largest city of Tazewell County and the second most populous municipality of the Peoria metropolitan area, after Peoria itself. As of the 2020 census, its population is 31,731. A small portion of the city limits extend into Peoria County. It is a suburb of Peoria and is part of the Peoria Metropolitan Statistical Area.

Pekin’s Mineral Springs Park is near Pekin Hospital and the Miller Senior Center. The city is the location of a high-rise residential facility of the United Auto Workers; the location of the Pekin Federal Correctional Institution; and the headquarters of a regional insurance company, Pekin Insurance.

Farmer Jonathan Tharp, who came from Ohio, was the first non-native American resident of what would become Pekin, building a log cabin in 1824 on a ridge above the Illinois River at a site near the present foot of Broadway Drive. Franklin School was later erected near this site. Other settlers soon joined him, including his father Jacob Tharp who arrived from Ohio in 1825. They lived near Chief Shabbona’s large Indian village of about 100 wigwams, populated primarily by Potawatomi, which was situated along Gravel Ridge, on the eastern shore of what is today Pekin Lake in northwest Pekin.

The county surveyor, William Hodge, measured and laid out a “town site” in 1827. In 1829, the plat was taken to Springfield and auctioned; the town site was awarded to Major Isaac Perkins, Gideon Hawley, William Haines and Major Nathan Cromwell. Major Cromwell’s wife, Mrs. Ann Eliza Cromwell, selected the name of Pekin. It has been stated that Mrs. Cromwell named the town “Pekin” because she thought Peking was on the exact opposite side of the world from the town she founded. In the 1800s, China and the United States were thought to be antipodes, or locations that were exactly opposite of each other on the globe. As such, towns were sometimes named after their supposedly antipodal locations. Another example is Canton, Ohio. “Peking” was often romanized as “Pekin”, as in other towns founded during the 1800s (such as Pekin, Ohio).

Nathan Cromwell named many of the city streets after the wives and daughters of early Pekin settlers. It was long held, as first expressed by W.H. Bates in the 1870 Pekin City Directory, that Cromwell was assisted by his wife Ann Eliza in the naming of the streets.