Getting a House Cheap: FHA or USDA Mortgages

A home may be purchased using USDA mortgages or FHA loans. Both USDA and FHA loans are 30 year, fixed, with a lower interest rate than a conventional mortgage, and are designed for people with lower income levels who may not otherwise be able to qualify for a mortgage.

FHA mortgages are insured by the Federal Housing Administration, providing backing to lenders who may not otherwise have taken a risk on the borrowers. The loans are designed for those who have good credit but low income, and do not have any rural restrictions. FHA loans require a low down payment and typically have lower costs as well.

USDA mortgages are either funded or guaranteed by the USDA--the United States Department of Agriculture. They are mortgages that do not usually require a down payment, though they do require a credit score of around 620 or higher and their terms are at the lender's discretion. These loans are designed for people who live in rural areas, usually defined as an area with less than 20,000 residents.