$400 Moves You In - For Less Than A Security Deposit On An Apartment You Can Become A Homeowner

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Mortgage and Lending with Millennial Home Loans, LLC NMLS #133925

The U.S. Department of Agriculture USDA Rural Development Loan is the only national loan program* that is available to all home buyers that allows for No Money Down Financing and No Cash Required by the borrower to settle on the purchase of a house.  These flexible loan terms are made available by the USDA through their Rural Development Loan Program, which is designed to promote home ownership in rural communities for moderate income households.

USDA LoansSince the USDA Rural Development Loan will finance 100% of the purchase price there is no down payment required on the USDA Loan.  This means the only other remaining items that require a cash investment by the buyer are the settlement related closing costs and escrows.  USDA Rural Development allows these items to be paid for or financed using flexible USDA Loan guidelines that can virtually eliminate the buyer's out-of-pocket cash requirements.  Compared to a comparable FHA Loan this will save the homebuyer thousands in upfront cash requirements.

You May Be Thinking That The USDA Loan Program Sounds Too Good To Be True?

Guess what, it's not.  If you are buying a house:

  • In a USDA Rural Development area; and
  • Your household income is less than USDA Loans established maximum County income requirements; and
  • You meet USDA Rural Development underwriting guidelines for loan approval

You may be able to purchase a house with only having to use your out-of-pocket cash required for the price of an Appraisal Report.  The Appraisal Report cost is approximately $400 and is the only item that is required that you pay for upfront during the home buying process when using the USDA Loan program.

Are You Saying That There Isn't Any Closing Costs?

No.  Just like every purchase transaction there are always closing costs.  However, with a USDA Loan the closing costs to be either (1) paid for by the seller, (2) under certain circumstances financed into the mortgage loan, or (3) a combination of these two.  

To understand how this works reference the following three scenarios based on a purchase price of $200,000 and for this example $10,000 in closing costs which can include such items as lenders fees, settlement/title fees, taxes, escrows, admin fees, homeowners insurance, warranties, etc.

Scenario 1 - Seller Agrees To Pay All Closing Costs:USDA Rural Development

The USDA Loan Program allows unlimited seller help to cover your closing costs.  By working with a knowledgeable Lender and Realtor you should know upfront how much the settlement costs will be to purchase a house.  When making the offer to purchase a home in a USDA Rural Development area, the sales contract will be written to include the requirement that the sellers agrees to pay up to a specific dollar amount to cover these costs.

Example:

  • Purchase Price:  $200,000
  • Contractually Agreed Seller Contribution Toward Closing Costs:  $10,000
  • Mandatory USDA Loans Commitment Fee:  $7,254
  • Financed Loan Amount:  $207,254 (Purchase Price + USDA Loans Commitment Fee)
  • Settlement Closing Costs:  $10,000
  • Cash Required By Borrower At Settlement:  $0 (Seller Contribution - Settlement Closing Costs)

Scenario 2 - House Appraises For More Than The Purchase Price:  

The USDA Loan Program is the only major loan program that allows for the difference between the appraised property value and the contract sales price to be applied toward settlement closing costs.   The maximum loan amount, excluding the USDA Loan Commitment Fee, will be determined by the sales contract price plus the settlement closing cost.  This amount can't exceed the appraised property value.  

Example:

  • Purchase Price:  $200,000
  • Contractually Agreed Seller Contribution Toward Closing Costs:  $0
  • Appraised Value of Property:  $210,000
  • Mandatory USDA Loans Commitment Fee:  $7,616
  • Financed Loan Amount:  $217,616 (Purchase Price + Closing Cost + USDA Loans Commitment Fee)
  • Settlement Closing Costs:  $10,000
  • Cash Required By Borrower At Settlement:  $0 (Financed Closing Cost - Settlement Closing Costs)


Scenario 3 - Combination of scenario 1 and 2

If the seller paid closing costs aren't enough to pay all closing costs and the property appraises for more than the sales price the home buyer can use a combination of seller paid closing cost assistance and finance the remaining closing cost into the USDA Loan, up to the appraised property value.

Example:

  • Purchase Price:  $200,000
  • Contractually Agreed Seller Contribution Toward Closing Costs:  $5,000
  • Appraised Value of Property:  $210,000
  • Mandatory USDA Loan Commitment Fee:  $7,435
  • Financed Loan Amount:  $212,435 (Purchase Price + Closing Costs Not Paid For By The Seller + USDA Loan Commitment Fee)
  • Settlement Closing Costs:  $10,000
  • Cash Required By Borrower At Settlement:  $0 (Financed Closing Cost + Seller Contribution - Settlement Closing Costs)

To learn more about your USDA Loan Financing options call using the USDA Rural Loan Program go to USDARuralLoan.com or email info@USDARuralLoan.com.  I specialize in USDA Loans and Renovation Loan Financing.  I am approved to lend nationwide and can be reached at (866) 747-2882.

 

 

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Topic:
Lending / Financial
Groups:
Mortgages
Realtors Needing the services of the Lending Powers
Mortgage Bankers
USDA Rural Development Loan Group
Tags:
no money down
usda rural development
usda loan
usda loans

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David Zuckerman

Mortgage Broker - Low-to-no downpayment mortgages
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