Can you buy a home with no money down?

Are you struggling to come up with a down payment for your new home? Like many, this can be the hardest part of the homebuying process, but it is possible through the USDA to acquire a no down payment mortgage! Thanks to USDA Guaranteed Home Loan, you can finance 100% of your mortgage.

 

A USDA loan, offers 100% financing for low and moderate income home seekers in certain areas around the metro area. This program was designed to help more Americans reach their goal of home-ownership, and also comes along with some additional benefits that a traditional loan would not!

Do I Have To be a First-Time Homebuyer?  

This program is most commonly used by first time homebuyers, but can be used my many other types of buyers as well!

What are the Benefits of working with a USDA Loan?

*No Down Payment:  

Getting your mortgage started with no down payment is the single greatest benefit of the USDA program. People who would originally not qualify for a home suddenly have the chance to be in the market! Additionally, the USDA Loan allows borrowers to use a gift or grant to go toward their mortgage. This program appeals greatly to low and middle income homebuyers, especially first timers.

*Low Interest Rates:  

 A USDA Loan is guaranteed and insured by the U.S. Government. This means that banks and mortgage companies are able to offer USDA loans at very low rates. Because they are insured  there is less risk to lenders if the loan is defaulted on. There are very competitive fixed interest rates for both 15 and 30 year loans.

*Low Monthly Private Mortgage Insurance (PMI): 

Private mortgage insurance is a requirement for loans with down payments under 20% of the total value. A USDA loan's PMI rate is one of the lowest of any loan program and doesn’t change for the life of the loan. Currently, the USDA loan’s PMI annual fee is 0.35 percent, based on the loan’s remaining principal balance.   

*Flexible Credit Guidelines

USDA offers flexible credit underwriting requirements for low to moderate income borrowers.  As with any loan, the borrowers credit score is used to determine how much they are eligible for. People with shorter credit histories can however, use payment histories for things like car payments, rent payments, cell phone bills, and things of that nature to establish an understanding of the borrowers limitations. 

*Ability to Finance Upfront PMI:

As with most home loans, there is also a 1% premium, based on the total value of the loan. With USDA, this can be rolled into the entirety of your loan with no money out of pocket. 

*Closing Cost Options:

USDA loans allow the seller to pay for the buyer’s closing costs, up to 6% of the sales price.  Gift funds from family members are also allowed to cover closing costs with proper documentation.  

If the appraised value of the property comes in more than the purchase price of the home, USDA will provide 100% financing home loans on the full amount of the appraised value.  The borrower can use the excess funds to finance closing costs. 

USDA Eligible Homes

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