Tower, MN USDA Home Loans vs Tower, 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 Tower, 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.
Tower, MN USDA Home Loans
1. What it is: The Tower, 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 Tower, 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.
Tower, 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 Tower, 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 Tower, 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 Tower, 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 Tower have income caps which could rule out higher earners, while FHA loans in Tower, MN do not.
To make the best decision, consider speaking with a mortgage professional who can provide advice tailored to your situation. Both Tower 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 Tower, MN USDA and FHA loan options? Call today (888)416-4805.
We service the following areas for FHA and USDA loans.
Learn more about Tower
Tower is a city located in Saint Louis County, Minnesota, United States. As of the 2020 census, the city had a total population of 430. State Highways 1 (MN 1), 169 (MN 169), and 135 (MN 135) are three of the main routes in Tower. Tower is located on the southern shore of Lake Vermilion.
The city was incorporated March 13, 1889, which makes it the oldest city in the Arrowhead region. It owes its establishment to the Soudan Mine, and was named after mining financier Charlemagne Tower. Tower is home to the Tower Train Museum; near the museum is McKinley Monument, the first erected in honor of former U.S. president William McKinley shortly after his assassination in 1901. President McKinley was in office from 1897 to 1901.
Tower set the Minnesota record for coldest temperature on February 2, 1996, when the temperature dropped to -60 °F (-51 °C). This was the lowest temperature ever recorded in the United States east of the Great Plains. Tower and the Embarrass Valley to the south are the coldest inhabited locations in the Lower 48 states, based on average winter temperatures.
According to the United States Census Bureau, the city has a total area of 3.41 square miles (8.83 km2), 3.00 square miles (7.77 km2) is land and 0.41 square miles (1.06 km2) is water.
Tower has a humid continental climate (Köppen Dwb), with long, bitterly cold, dry winters and warm summers. January averages 4.9 °F or −15.1 °C, and lows reach 0 °F or −17.8 °C on 67 nights annually. Highs only reach the freezing point 18–19 days during December to February, and in combination with a seasonal snowfall of 68.7 inches or 1.74 metres, snow cover is thick and long−lasting. Spring, and more especially autumn, are short but mild transition seasons. July averages 64.0 °F or 17.8 °C, with highs reaching 90 °F or 32.2 °C on only 3.2 days annually, with only about four-fifths of all years seeing temperatures that high. Summer nights are cool despite the warm days, with the average window for freezing temperatures August 25 thru June 22. Precipitation averages about 28.18 inches or 715.8 millimetres per year, and is concentrated in the warmer months. The all−time record high temperature is 101 °F (38.3 °C), while the all−time record low is −60 °F (−51.1 °C), a range of 161 °F (89 °C), the second highest temperature variation in the state behind Federal Dam, Minnesota. Tower is slightly colder than International Falls, but a half of a degree warmer overall than Embarrass.