No Money Down USDA Little Known Mortgage
Originally designed to help rural Americans realize the dream of homeownership, these mortgages can also be used to finance a wide array of properties from single-family homes to multifamily properties and even businesses. Plus, the USDA also provides grants for various development projects.
A USDA loan can be used to purchase, refinance, renovate, repair or even relocate a home. What many don’t realize is that these guaranteed loans offer 100 percent financing to income-qualified individuals, making them as close as you can get to a subprime loan, only with a safe, low fixed interest rate and payments!
Be aware, however, that the USDA only guarantees 90 percent of the loan.
There are many advantages to choosing a USDA backed mortgage.
One hundred percent financing makes these loans among the most desirable of loan programs still in existence. The only other programs out there that offer this today are VA loans and transactional funding for those flipping houses.
Even better than just no down payment, going this route means the possibility of rolling in closing costs or use grants and gift funds, something most other programs won’t allow borrowers to do.
Want more? You may even qualify using “non-traditional” credit and you don’t have to have amazing credit to get approved either. You should have at least a 620 to 640 credit score, but you may be able to use credit references like cell phone, insurance and utility bills to build out your credit if you don’t have very much of it.
Plus, USDA direct home loan interest rates are some of the best around and often better than conventional mortgage rates. The rates on guaranteed loans are determined by the individual lender.
Who Doesn’t Stand a Chance of Getting a Loan Like This?
Of course, there are a couple of catches to getting a loan like this:
Income eligibility is capped at 115 percent of your median area income. To check your eligibility, use the income eligibility calculator at the USDA website.
These are strictly 30-year fixed rate loans.
You must be able to qualify with maximum debt-to-income ratios of 29/41. To determine if you qualify, add the loan principle, taxes, insurance and interest and divide the sum by your gross monthly income. If this calculates to 29 percent or lower, you qualify. Additionally, your total debt, divided by your gross monthly income must be equal to or less than 41 percent.
You must be at least two years out of a bankruptcy discharge and be “credit worthy.”
The property must be in an approved rural area.
You cannot own another home within commuting distance of the home you wish to purchase.
I have a web site that explains these loans in detail. www.nomoneydownmortgages.us