USDA Rural Development ZERO DOWN Payment loans are BACK

ZERO DOWN USDA Rural Development loan are BACK! Funding is once again available!

Minneapolis, MN: I won't bore you with the details, other than to say that USDA Zero Down Payment Home Loan program ran out of money. Congress took forever to allocate new funds, but allocate they did, and now this great program is alive and well once again!

USDA Rural Development Loans

St Paul, MN: Rural Development, formerly known as the Farmers Home Administration (FmHA), administers a mortgage loan guaranty program - also called the Section 502 Program -- designed to provide rural home financing for first-time homeowners or those who don't own structurally sound or adequate housing. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare home sites, including providing water and sewage facilities. Prospective borrowers can apply with participating lenders like us, who process and close the loans. The Rural Development organization, an office of the U.S. Department of Agriculture (USDA), underwrites the loan packages.

'Rural' is defined by the organization as being outside a Standard Metropolitan Statistical Area (SMSA). The property that the borrower wishes to buy must be on a publicly-maintained road, though it can be located in a development with private roads. And, as with the mortgage revenue bond authority loan, it must be a single-family owner-occupied home from which no income can be derived. The loan amount can be up to 100% of the lesser of the property's cost or its appraised value. The seller is allowed to pay all closing costs, making it a true 'no money down' transaction for the buyer. Additionally, if the property appraises for more than the purchase price, the borrower can finance in the closing costs and the guaranty fee (which is 2% of the loan). The guaranty fee can be financed as long as the property appraises for at least the amount of the purchase price plus the fee. Anything above that amount can be used to finance closing costs. The maximum loan term under the 502 program is 30 years. (USDA Property Eligibility Check web site)

The program sets limits on the maximum adjusted gross income that a qualified borrower is allowed to have, as well as maximum loan amounts based on the area's current FHA loan limits. Allowable income adjustments include amounts for minor children, child-care expenses, and elderly family members. For the most part, these limitations are not placed so low as to preclude a large segment of moderate-income borrowers from qualifying for the program. Perhaps the most stringent limit of the program, however, is the requirement that the borrower be unable to obtain the financing necessary to buy a home without Rural Development's assistance. In other words, the borrower must be rejected by or be unable to qualify for any other available loan program, such as conventional, FHA, or VA loans. But although unable to qualify for other funding sources, borrowers must still have an OK credit record that shows a history of meeting their financial obligations. 

This program is, in my humble opinion, this is the best mortgage available to help many areas increase sales, over come the negative effects of the mortgage mess, and truly help buyers and sellers.

Rural Development also offers a subsidized payment program for borrowers who don't have sufficient income to qualify for the standard plan. A portion, or all of the loan, may be subsidized. A formula is used to determine the parameters that the borrower fits into. Nevertheless, this loan also requires that the applicant have acceptable credit.

We can pre approve buyers in a few hours in most cases and close pretty fast. NOT every bank or broker is able to offer or knows how to do these loans, make sure you deal with an RD Loan expert (like us!).

• USDA INCOME Eligibility Check

• USDA Property Eligibility Check

Now the highlights:

100% of sales price up to 102% of APPRAISED value, which may include ALL closing costs and pre paid items and even refund escrow deposit in many cases.

NO PMI--- this means lower payments, means more people fit into the debt to income limits

It is NOT just for "rural" areas. The agency's (USDA) definition of rural, and what most of us consider rural, are two different things. If you check the maps for your area you'll be delighted in what qualifies as rural.

All homes, condos and town homes qualify if there are in a "eligible area".

With a 620 score, the buyer needs no explanation for prior derogatory credit nor do they have to pay off collections.

There are NOT nearly as many credit "gray" areas as there are in FHA lending.

There are NOT any loan limits.

Sales concessions are NOT needed in most cases (seller paid closing costs).

 

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Joe is a Certified Minnesota Mortgage Specialist (MMS). His team has over 50-years mortgage lending experience in MN and WI. View his web site at www.JoeMetzler.com. Joe's NMLS  # is 274132

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