USDA stands for the United States Department of Agriculture. The USDA Rural Development or RD loan program is one of the best fixed rate zero down payment loans which exists for first time home buyers. The underwriting guidelines are more flexible but they may change in the coming year so take advangtage of this program now before it's too late. Also, there are no loan limits but income limitations do apply based on the county you are going to purchase the home in and your family size. Finally, USDA program offers similar interest rates and lower annual mortgage insurance fee vs FHA loan so you are able to put zero down and obtain a lower payment than FHA loan with a 3.5% down payment. Try USDA mortgage calculator. Let's discuss some of the qualifications for this loan:
The USDA home loan requires a minimum credit score of 640 and you may qualify for the program with a limited credit history. For example, 2 credit accounts with a 12 month history and 2 non-traditional accounts such as rent and electric with 12 month history may be enough credit history to qualfiy for this program.
A first time home buyer who wants to utilize the USDA 100% financing Rural Development program and learn about eligibility should seek USDA approved lenders and a loan officer who has experience with these type of home loans because the USDA loan underwriting guidelines and requirements are different than any other program. A USDA guaranteed loan takes longer to process than a conventional loan and you need to apply for the program as early in the home buying process as possible. Typically, it takes about 21-30 days to get approved but then your file must go to the local RD office for their stamp of approval which could add 24 hours to 30 days to the loan processing time in some states. You should allow about 45 to 60 days to close on a USDA deal.
If you want to take advantage of this great zero down payment program then you need to apply and get pre-approved for USDA home loan program now by filling out the pre-approval application. One small mis-step in the processing of your loan can make the difference between your loan getting approved or denied. Believe me, you don't want to provide tons of paperwork and information to get denied and lose out on your dream to own a home.