What type of amortization is required for USDA loans?

USDA loans require fixed amortization, which means that the loan payments are structured so that the borrower pays the same amount each month over the life of the loan. This consistency allows borrowers to effectively plan their monthly budgets, as they will know exactly what their mortgage payment will be from month to month.

Fixed amortization also ensures that each payment goes towards both the principal and the interest, gradually reducing the remaining balance of the loan over time until it is fully paid off by the end of the term. This predictability and stability can be especially beneficial for homeowners with fixed incomes or those who prefer not to deal with the fluctuations that come with other types of amortization, such as variable or adjustable schedules. In contrast, other options like variable or adjustable amortization would cause monthly payments to vary, making it more difficult for borrowers to manage their finances effectively.