Spokane WA USDA Home Loan Program - The Cure For No Down Payment

I’ve written about the USDA home loan program in the past but its ease of use, great rates, and fairly liberal qualifying criteria make this a loan program that many home buyers should consider using – if you don’t have 20% to put down.

Besides the VA loan program this is the only 100% loan program in existence. With literally just a few hundred dollars out of your pocket you can purchase almost any home in Stevens County (and most of the rest of rural Washington as well). The goal of USDA’s lending programs is to “provide low- and very low income people the opportunity to own adequate, modest, decent, safe, and sanitary homes in rural areas.”

USDA actually has two different loan programs - the USDA Singe Family Housing Guaranteed Loan Program (Section 502 loan) and the USDA Rural Housing Direct Loans (Section 502 Direct) – with the later being almost completely invisible to the public.

Why? For one, there’s no one “selling” the Direct loan program because it’s not offered by lenders. You have to apply directly to USDA for this program. Second, the Direct loan has a pretty restrictive income limitation and the population group that meets these restrictions is a much smaller group than those who qualify for the Guaranteed Program.

The first qualifying criteria of USDA programs is a limitation based upon your income – and not just yours but everyone in the household. This means they’ll count the income of anyone living in the home over the age of 18 (with some exceptions for full-time students). For the Guaranteed program the income limit is 115% of the area median, adjusted for family size, and for the Direct loan program it is 50% to 80% of the area median, adjusted for family size.

Assuming you had income approaching the $73,600 limit you’d be on track to qualify for a home priced over $250,000. That amount covers quite a few very nice homes in Stevens County and rural Spokane County.

The second qualifying criteria for utilizing the USDA programs is location of the home. Generally speaking they will lend in “rural” areas.

There are other limitations I’ll lump into the category of those that don’t meet USDA’s stated goal of helping those in need.  If you have enough money in savings to make a 20% down payment they may reject your application. You cannot own another home, even if you rent it to tenants. The program is designed to help people that need help, not those who have lots of savings but don’t want to put it down on the home.

Getting pre-approved for the USDA loan is the first step in the process. Many, but certainly not all, lenders can offer the program and all have their own application process. With us, it’s a 15 to 20 minute telephone conversation and you’re on your way.

If you, or someone you know, has limited savings and wants to purchase a home, the USDA program is a program you should consider.

Give us a call ~ we’d be glad to help qualify you for the UDSA home loan program.