With all the noise the doom and gloom media is making about tightening credit restrictions and rising interest rates, many homebuyers have been led to think low down payment loans are a thing of the past. Make no mistake, there are many programs still available. One often-overlooked loan program belongs to the U.S. Department of Agriculture (USDA). With no downpayment requirement, the USDA’s Section 502 guaranteed Rural Development housing loan has similar credit guidelines and debt-to-income ratios as FHA loans.
The Bullet Points:
- USDA loans are strictly for home purchases OR refinances of current USDA loans
- There is NO downpayment requirement
- There is NO monthly mortgage insurance
- Targeted to communities that generally have fewer than 20,000 residents and are located within an eligible geographic area
- Although the program was established to help low and moderate-income buyers it’s not designed solely for them
- Buyer’s household income may exceed the area’s median income (can reach 115% of median income)
- Search your county’s median income here. For example, according to HUD the median household income for Tarrant County TX is $65,800 and therefore USDA would allow for household income of up to $75,670 (115% of $65,800)
- Important! – USDA considers income from ALL adults that reside in the home (whether they’re on the loan or not) Why is this important? In some cases the combined income may exceed 115% of the area’s median income, therefore disqualifying them from USDA financing
- Designated areas of eligibility were updated this January (2014) – you can go here Search an Address to find out if the home you’re looking to purchase is eligible
- There are certain property eligibility requirements such as the house being ‘modest in size, design & cost’ AND the home must meet the voluntary national model building code adopted by Texas (or the state the home is located in)
This is a great product to know about and might just fit perfectly with the right homebuyer. My team and I are more than happy to answer questions you have related to the USDA Zero Downpayment Home Loan. Email me to get started with this program today Cole@ColeHolmes.com
2 thoughts on “USDA Zero Down Payment Home Loans!”
I hope you don’t mind a comment from Down under here in Australia. I came across your blog when looking for similar local blogs. Interestingly your site is No. 1 in the Google rankings down here.
Good blog though, it gives very helpful information for would be and existing home owners.
Hi Dave – thanks for the comment from Down Under! #1 in Australia? How funny…maybe I’m in the wrong market! 🙂