You may have heard that 100% home loans or financing a home without a down payment are a thing of the past. Well that’s not exactly true. There is a true 100% financing option (USDA Home Loans) out there that many people, including some lenders, don’t know anything about.
What type of home loan is it? Well, it’s called a USDA Rural Development Home Loan and it allows certain borrowers the ability to buy a home with No Down Payment, a Great Mortgage Rate and low monthly mortgage insurance! The only loans that get any better than this are VA home loans for disabled Vets and only a few can qualify for those!
So, let’s jump in and see if a USDA home loan is right for you…
Who can get a USDA Rural Home Loan?
These loans are guaranteed by the USDA and the government only wants to insure them for low-to-moderate income families who live in a USDA designated rural area and are wanting a 100% financing option. These loans are a very cost effective way for someone to finance their new home when they can meet the USDA Guidelines.
What is a USDA Home Loan?
First off, this loan goes by many different names. You may hear it called USDA Rural Home Loans, USDA Home Loans, USDA Mortgages, Government Rural Loan (this is only one type of governmental loan; there are others available, such as FHA home loans and VA home loans), 100% Financing Loans, No Down Payment Loans, etc… No matter what it is called, it’s a great way to buy a home! We will simply call them USDA Home Loans for ease of understanding.
So what makes this loan different than other government loans?
USDA Home Loans are one of only a few true 100% home loans that are left in the market today. The only other true 100% home loans in Missouri are the VA home loans we mentioned earlier. There are some FHA home loans and other low down-payment loans where you can get a grant for the down payment, but those are still not a true 100% financed home loan.
USDA Home Loans finance the entire purchase price of the home, require no down payment, allow for the seller to pay all of your closing costs, and they have very low monthly mortgage insurance! So, what’s the catch you say? Like the VA, the USDA does charge a funding fee of 1% (VA charges 2.15% for first-time use by comparison) that is usually rolled into the loan amount. It is important to note that this money is sent to the USDA and is not profit for the lender.
USDA Home Loans have a fixed rate for 30 years that is usually in line with most other loans and there are no limits on the price of home you can buy. One of the main qualifications for this loan is that the home must be within the designated USDA rural areas. Luckily, most of rural Missouri is in areas that qualify for the USDA home loan program.
If you qualify for a USDA home loan, it truly is one of the most cost effective ways to purchase a home with very little money out of pocket on the market today!
The Advantages to USDA Home Loans
Due to the fluid nature of the housing market, we felt for a better understanding of USDA Home Loans, the advantages they have to offer, and how to qualify for them; we recommend you check out the *USDA Rural Development page. Here you will find the most up-to-date information on USDA Home loans.
Are you eligible for a USDA home loan?
If you are looking to see if the home you are looking to buy is eligible for a USDA home loan, please visit the USDA Income and Property Eligibility Site for details.
*If you live in Southwest Missouri here are some current USDA ineligible area maps, as of 5/6/14, with the areas that are ineligible for USDA home loans.
**The information we provide here is specific to USDA Home Loans in the state of Missouri. If you reside outside the state of Missouri and are interested in a USDA home loan, we would advise you to research that states guidelines before proceeding with a loan.
How do I get started?
The process is very simple. To get started with a USDA home loan today, fill out our quick inquiry. It will only take you a couple minutes and will give us the information we need to pre-qualify you for a loan. Once we receive your inquiry you can expect to hear back from us.
The USDA site is best viewed using Internet Explorer.
*This information is accurate as of 12/13/16.