No Money Down, Affordable Housing Program
One of the least known, most misunderstood, yet beneficial mortgages is a USDA Guaranteed home loan. Many think of USDA Rural Development Guaranteed Loans for low-income, small purchase prices, and only for properties way out in the country. Conversely, most U.S. properties are eligible, and middle-income families often meet income limit requirements. Additionally, USDA loans are flexible when it comes to credit scores.
Benefits of a USDA Loan
USDA loans offer a great deal of flexibility for buyers that are interested in living in a rural area.
No Money Down
USDA provides one of the few true 100% first mortgage products, which means a buyer may purchase with no down payment.
Seller Paid Closing Costs
In addition to no down payment, USDA even allows for the seller to pay up to 6% of the purchase price in closing costs and pre-paids for the buyer.
Lower Mortgage Insurance Premiums
The USDA funding fee is the cheapest compared to FHA and VA.
Flexible Credit Criteria
With sufficient credit scores, it is possible to receive a USDA no money down approval. Ask you loan officer for the specifics.
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Frequently Asked Questions
1. Is USDA just for first-time home buyers?
Although USDA is excellent for first time home buyers, it is not a requirement. Whether you are moving up, downsizing, or buying a retirement home, USDA is a great no money down purchase option.
4. Aren’t USDA loans just for farms, low-income, and small purchase prices?
USDA Rural Development Guaranteed Loans do not allow financing for properties with operating income. Plus, USDA housing income limits are very liberal, and most properties in the US qualify for USDA financing up to conforming loan limits.
2. Do I need high credit scores to qualify for a no money down purchase?
Our USDA minimum credit score is only 620 and USDA allows for limited credit buyers to achieve homeownership with no money down and very affordable payments.
5. Is it possible to bring no money at all to closing with a USDA loan?
Absolutely! When combining 100% of the purchase price plus the seller paying up to 6% of the price in closing costs, it is possible for the buyer to bring no money at all to closing. With sufficient planning up-front, it may be possible to receive part or all of the earnest money deposit back at closing too.
3. Are USDA interest rates fixed or adjustable?
The only USDA option is a 30 year fixed term which is perfect for a buyer financing 100% of the price because it provides security in a fixed monthly principal & interest payment.
6. Does USDA mortgage insurance cancel at 80%?
Unlike conventional loans where a borrower may request PMI cancellation when reaching 80% of the value, USDA mortgage insurance (called an annual fee) continues for the life of the loan. Although USDA mortgage insurance is very low compared to other programs and it decreases every year until paid off.
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