USDA GUARANTEED LOAN
No Money Down
THE BEST GOVERNMENT LOAN PROGRAM
TO BUY A HOME WITH NO MONEY DOWN!
1. What is the USDA guaranteed rural housing loan program?
The USDA guaranteed rural housing loan program is a federally-guaranteed home purchase loan program targeted towards individuals with moderate income to support home ownership in “rural” areas.
2. What are the primary benefits of this program? True 100% financing – no down payment required.
- Low monthly mortgage insurance
- Seller concessions up to 6% to cover closing costs
- Very attractive 30 Year Fixed rates comparable to FHA/VA!
- 620 Mid Credit Score ( may be able to do lower scores)
- No Buyer cash contributiion required OR cash reserve requirements
3. How does the program work?
Borrowers identify a lender that offers the programs and apply like any other home loan program. The loan officer qualifies the borrower according to program guidelines and submits the loan package to the lender for underwriting, closing and funding of the loan.
4. I thought the USDA offered loans directly. Is that a different program?
There are DIRECT loans available from the USDA where the loans are made with government funds. These are much more limited and focused on families with VERY LOW incomes. Broker/banker participation in direct loans is not encouraged.
5. How does the government guarantee work?
Just like a VA or FHA loan, the USDA guaranteed loans are issued by participating lenders and insured by the government. Today, the borrowers are charged a one-time 2.1 % guarantee fee, which is financed in the loan amount as their contribution to the guarantee fund, much like UFMIP on FHA loans and the VA funding fee.
6. The loans are made in “rural” areas. What is considered a rural area?
Generally any area outside of an urban or heavily-concentrated suburban area would be considered rural for this program. Cities with populations under 50,000 are generally all eligible. Just about every county in Pennsylvania and New Jersey has eligible areas. The USDA provides a real-time tool to confirm property eligibility to make sure the home is in an area considered rural. Just go to the goverement link http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp&NavKey=property@11 and plug in the address.
7. What types of homes are eligible?
Any type of single family or multi-family home that meets FHA guidelines. Manufactured homes are allowed, but ONLY brand new homes that have never been occupied.
8. The program is targeted for those with “moderate” income? Are there limits to income?
Yes. The limits for family income can be found at http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do. Use the "Income Limits" tab, Single Family Housing and the "Guarenteed" tab. As of this writing the limits had been generously increased. A family up to 4 persons can earn up to $92,000 and still qualify. Some areas even have higher income limits. Check the site for details.
9. Is this program only for First-time buyers?
No. The USDA program is available for all homebuyers for principal residences only.
10. What if my buyer owns another home?
In special cases buyers can own more than one home. The new home being purchase with the USDA program must be part of a relocation plan by the buyer. Distance tests apply between the new home and the old home – check the website for up-to-date requirements.
11. Are there any other restrictions on borrower eligibility?
Yes. If the homebuyers has the funds to make a 20% down payment they would not be eligible for the program. This does NOT include retirement funds.
12. Can the USDA program be used for refinancing too?
Yes. But only for rate/term refinancing of existing USDA loans. No cash out is allowed.
13. What are the credit requirements for the program?
Generally USDA guidelines are similar to FHA – credit scores above 620 are required in most cases. Debt ratios of 29/41 are applied with some exceptions up to 33/45 with strong compensating factors.
14. Are past bankruptcies and foreclosures allowed?
Yes. Generally 3 years after bankruptcy or foreclosure must have past with good re-established credit. Prior foreclosure on a government loan is not allowed and will disqualify an applicant.
So if your tired of renting or just cant save up enough to get into that bigger home, The USDA loan may be the answer!
I'M READY. WHAT'S MY NEXT STEP?
To find out if you qualify for a no money down loan or to find an eligible property, please contact us at 610-291-6415 or APPLY HERE online using our secure and protected online application.