USDA Financing is a little known option for buying homes in Tucson with zero down. Buying a home with no money down allows you to finance 100% of the home. No down payment homes are very attractive for many Tucson home buyers who are looking to buy a home with no upfront money.The USDA eligibility tool is a helpful resource for Tucson home buyers looking for homes in Tucson with no money down.
What is a USDA Mortgage?
USDA stands for United States Department of Agriculture.
How does that have anything to do with a mortgage? A USDA Mortgage provides low-cost, low rate, insured home mortgages for people who want to become home owners in designated rural areas.
A USDA home loan might be right for you if you want to live in a rural area and purchase a home with no down payment. The other great thing about a no money down USDA mortgage is that it’s very similar to an FHA mortgage when it comes to your credit. A USDA home loan can give you piece of mind with low closing costs, no down payment and great 30 year fixed interest rates.
What Types of Loans does USDA offer?
Currently, there are two kinds of USDA home loans available for single family households:
USDA Guaranteed Rural Housing Loans:
USDA Guaranteed Loans are the most common type of USDA home loan and allow for higher income limits and 100% financing for home purchases. USDA Guaranteed Loan applicants may
have an income of up to 115% of the median household income for the area.
Contact Us to see if you qualify under your area’s income limits for this program.
All USDA Guaranteed Loans carry 30 year terms and are set at a fixed rate.
USDA Direct Rural Housing Loans:
USDA Direct Housing Loans are less common than USDA Guaranteed Loans and are only available for low and very low income households to obtain home ownership, as defined by the USDA. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. Contact Us to find out what the area income limits are for this program in your area.
What are the advantages of USDA home loans versus Conventional Loans?
USDA home loans offer many benefits and protections that you won’t find in other loans including:
USDA loan requirements are not totally credit score driven, although it is typically required to have at least a 620 FICO score to obtain an approval with most lenders. USDA loan guidelines are written in a way that provides the borrower the benefit of the doubt that there had been, at some point in their past, circumstances beyond their control, and as long as the borrower has recovered from those circumstances in a reasonable manner, they’re generally going to be credit-eligible for an USDA rural loan mortgage.
USDA Rural Loans Require No Monthly Mortgage Insurance:
A distinct advantage of a USDA loan, as compared to a conforming loan, is great interest rates and no mortgage insurance (MI). The daily USDA Mortgage rates are usually comparable to, if not lower than a conforming 30-Year Fixed loan.
USDA loans Require No Down Payment:
USDA Mortgages have no down payment requirement. Other loan programs don’t allow this. A conventional loan will require at least 5% down and up to 10% if you are buying in a declining market
What factors determine if I am eligible for an USDA Loan?
To be eligible for an USDA home Loan, your monthly housing costs (mortgage principal and interest, property taxes, and insurance) must meet a specified percentage of your gross monthly income (29% ratio). Your credit background will be fairly considered. At least a 620 FICO credit score is required to obtain an USDA approval. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios can be exceeded somewhat with compensating factors. Applicants for loans may have an income of up to 115% of the median income for the area. To find out what the Maximum USDA Guaranteed Loan income limits are for your area, Contact Us. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance.