USDA Zero Down Home Loan

June 29, 2015
USDA Rural Development Program

If you are a first time home buyer who is looking to buy a home in a rural or country area then the USDA Rural Development Guaranteed Housing Loan Program may be the ticket to homeownership. This program only requires a 640 minimum credit score and the seller can pay the closing costs. Also, you can have a limited credit history and supplement it with non-traditional credit such as rent, utilities (electric, gas, water, etc.) and still may qualify for the program.

There are some requirements you must follow which include: (1) You must purchase an eligible home and you can check a property address at USDA website to determine if it is eligible and a map will be displayed showing eligible and ineligible areas in the vicinity of your home search. (2) There are maximum household income restrictions based on county which have a floor based on household size starting at $74,750 for a 1 to 4 member household and $98,650 for a 5 to 8 member household. You can check income limits at USDA website. One caveat is the fact that USDA will count your spouse’s income toward the maximum income limit even if he or she is not on the loan. (3) The property needs to be a single family home, condo, or townhome. No mobile/manufactured/modular homes or income producing properties such as a working farm are allowed through our loan program. Also, the home must be in move-in condition which means there can’t be any major repairs such as replacement of roof unless the seller is willing to complete the repairs prior to closing your loan. Finally, if there is a septic tank it must be in working order and if there is a well then the water must be tested to meet minimum water quality requirements.

One huge advantage of the USDA Rural Program is that the payment is lower than the 3.5% FHA Program because the monthly fee associated with the USDA loan is lower than the mortgage insurance on the FHA loan. Why would you want to put down 3.5% on a home and have a higher payment than the zero down loan program payment?

I would like to point out that you must deal with a lender who specializes in USDA loans because the guidelines are different than any other program and recently the USDA has revamped their guidelines and your loan officer must be up to date on these changes. Our team are USDA loan experts who have assisted thousands of first time home buyers with limited savings to purchase a home with zero down payment and in many cases the seller paid for most or all of the closing costs. I have done loans for many firsthomebuyers which they did not need to bring any funds to the closing table. So, if you are going to purchase a home in a small town then you can start the ball rolling by getting pre-approved today or call one of our team members at 847-516-5743.