Good news for home buyers needing a zero down loan! The USDA has just announced that
funds are now available for 100 percent financing — and at better pricing than last year! Here are the details.
Loan Details
No down payment. 30-year fixed rate, no prepayment penalty. Interest rates are competitive with conventional loans.
The USDA Fee (now 1%, previously 2.75%) is financed into the loan. Other eligible closing costs may also be rolled into the loan, or you may use gift money, grant money, or a seller contribution to pay for the closing costs. This means you need very little out-of-pocket cash to become a home owner.
The monthly mortgage insurance (MI) fee has been reduced to only .35% (previously .5%).
Credit and Debt Ratio
Perfect credit not required. If you had a late payment, collection/charge-off, bankruptcy, or even a foreclosure in the past, you might still qualify. In general, underwriters want to see at least 12 months of good credit to show you have recovered from the past and are on track.
Debt-to-income ratio should not be over 41% unless your credit score is over 660. In that case, there is more flexibility. (DTI is calculated with your gross income before any deductions, using your proposed housing payment plus minimum required payments on your credit report. You do not count living expenses such as transportation, cell phone, food, etc.)
Income Details
You can earn up to 115% of the area median income. Number of people in the family is taken into account.
Property Details
97% of the U.S. is USDA-eligible. Homes located in large metropolitan areas are ineligible. Many suburbs, charming towns, as well as rural areas qualify.
To check both income and property eligibility, click here. Or, speak with your state licensed mortgage loan officer. If you are in WA or CA, I am available to help you.
