USDA still offers their no down payment home loans are available for most areas of the state of Tennessee. The " RD " is a great loan, in fact it is one of the only loan programs that has remain virtually unchanged through the recent upheavel in the mortgage industry.
The program has relaxed credit score requirements when compared with conventional loan programs, as the minimum score requirement is only 620. This allows for buyers that have had credit issues in the past, but has overcome them, to qualify for the purchase of a new home sooner.
Besides the greater opportunity for borrowers with past credit issues, the RD loan allows for a much cheaper cost when purchasing a new home. Besides the obvious benefit of being able to buy a home without a down payment, buyers do not have to worrry about increasing their mortgage payment but $100 or more to pay for mortgage insurance;RD loans do not have mortgage insurance. (update: USDA loans now require a nominal monthly mortgage insurance. About 1/4 of the mortgage insurance required on FHA Loans)
Another characteristic of RD loans that sets them apart from conventional and FHA loans is that the seller can pay the buyers closing costs. This means that with no money needed for down payment AND no money needed for closing cost, the buyer CAN get into a home with virtually no money out of pocket.
As wonderful as this program is, it does have its limitations. It has income restrictions and geopraphic restrictions. This means that buyers may make TOO MUCH money to qualify for the program ( Click_Here to check the income limits in your area) and that once the buyer qualifies for a RD loan, they must then find a home that is in a RD eligible area.
The map Click Here provides an overview of the areas in the state of Tennessee that are inelible for RD home loans. The areas that are shaded darker will be the inelibile areas while the majority of the map that is a lighter shade would be eligible for RD financing.
Click Here For a more detailed county by county description of the ineligible areas
Updated Jan 2013
The USDA program has added the requirment for monthly mortgage insurance to their loan program. The monthly amount is $33.34 per month on a $100,000 home. While this is disappointing, it is important to note that the program still requires zero down payment.