Let’s get
right into what I think is the best-kept secret in home buying…
The USDA zero down payment loan.
In a nutshell, the USDA loans require no down payment, offer reduced
mortgage insurance premiums, feature below-market mortgage rates and are
available to home buyers with low-to-average income for their area.
The minimum credit score required is only 620.
USDA loans are mortgages backed the U.S. Department of Agriculture as part of its USDA Rural Development Guaranteed Housing Loan program.
I’m getting people
into USDA home loans who never thought they could do anything but rent.
Check
your USDA eligibility here
The good news is that the USDA loan is widely-available. Yet, if you’re like most U.S. consumers, it’s a program you’ve only just learned about and only recently has this no down payment loan been updated and adjusted to appeal to rural and suburban buyers nationwide.
Most lenders don’t even list the USDA loan on their menu.
Using a USDA loan, buyers can finance 100% of a home’s purchase price while getting access to better-than-average mortgage rates. This is because USDA mortgage rates are discounted as compared to rates with other low-downpayment loans
Beyond that, USDA loans aren’t all that “strange.”
The repayment schedule doesn’t feature a “balloon” or anything non-standard; the closing costs are ordinary; and, prepayment penalties never apply.
The two areas where USDA loans are different is with respect to loan type and downpayment amount.
With a USDA loan, you
don’t have to make a downpayment; and you’re required to take a fixed rate
loan. Adjustable Rate Mortgages (ARMs) aren’t even available.
Rural loans can be used by first-time buyers and repeat home buyers
alike.
USDA loan rates are
often lower than comparable conventional 30-year fixed mortgage rates. Plus,
because mortgage insurance rates are lower, with your small down payment,
USDA loans can often be a better deal as compared to FHA loans or conventional
loans.
With the USDA Rural Housing Program, your home must be located in a rural area. However, the USDA’s definition of “rural” is liberal.
Many small towns meet the “rural” requirements of the agency, as do suburbs of most major U.S. cities. If you like what you see please share it will help me to assist more nice folks achieve their real estate dreams. If you like what you see please share and follow. Thanks in advance, Greg