St. Cloud, MN USDA Loans VS FHA Loans

St. Cloud, MN USDA Home Loans vs St. Cloud, 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 St. Cloud, 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.

St. Cloud, MN USDA Home Loans

1. What it is: The St. Cloud, 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 St. Cloud, 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.

St. Cloud, 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 St. Cloud, 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 St. Cloud, 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 St. Cloud, 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 St. Cloud have income caps which could rule out higher earners, while FHA loans in St. Cloud, MN do not.

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

We service the following areas for FHA and USDA loans.

Learn more about St. Cloud

St. Cloud or Saint Cloud is a city in the U.S. state of Minnesota and the largest population center in the state’s central region. The population was 68,881 at the 2020 census, making it Minnesota’s 12th-largest city. St. Cloud is the county seat of Stearns County and was named after the city of Saint-Cloud, France (in Île-de-France, near Paris), which was named after the 6th-century French monk Clodoald.

Though mostly in Stearns County, St. Cloud also extends into Benton and Sherburne counties, and straddles the Mississippi River. It is the center of a contiguous urban area, with Waite Park, Sauk Rapids, Sartell, St. Joseph, Rockville, and St. Augusta directly bordering the city, and Foley, Rice, Kimball, Clearwater, Clear Lake, and Cold Spring nearby. The St. Cloud metropolitan area had a population of 199,671 at the 2020 census. It has been listed as the fifth-largest metro with a presence in Minnesota, behind Minneapolis–St. Paul, Duluth–Superior, Fargo-Moorhead, and Rochester. But the entire St. Cloud area is within Minnesota, while most of Fargo-Moorhead’s population is in North Dakota and Superior, Wisconsin, contributes significant population to the Duluth area.

St. Cloud is 65 miles (105 km) northwest of the Twin Cities of Minneapolis–St. Paul along Interstate 94, U.S. Highway 52 (conjoined with I-94), U.S. Highway 10, Minnesota State Highway 15, and Minnesota State Highway 23. The St. Cloud Metropolitan Statistical Area (MSA) is made up of Stearns and Benton Counties. The city was included in a newly defined Minneapolis–St. Paul–St. Cloud Combined Statistical Area (CSA) in 2000. St. Cloud as a whole has never been part of the 13-county MSA comprising Minneapolis, St. Paul, Bloomington and parts of western Wisconsin.

St. Cloud State University, Minnesota’s third-largest public university, is located between the downtown area and the Beaver Islands, which form a maze for a two-mile stretch of the Mississippi. The approximately 30 undeveloped islands are a popular destination for kayak and canoe enthusiasts during safe river levels and flow. and are part of a state-designated 12-mile stretch of wild and scenic river.

St. Cloud owns and operates a hydroelectric dam on the Mississippi, the state’s largest city-owned hydro facility, that can produce almost nine megawatts of electricity, about 10% of the total electricity generated by 11 Mississippi hydro dams in Minnesota.