USDA/RD Guaranteed Loans- A “Zero Down” Option
USDA/RD Guaranteed loans are issued by federally qualified lenders and insured by the U.S. Department of Agriculture, a division of the U.S. Department of Rural Development.
USDA/RD Guaranteed loans started to get a lot of attention in 2009 for its lenient eligibility standards and new benefits for growing communities. With the economy in its current condition First Time Home Buyers, Move-up homebuyers, and low to moderate income borrowers are struggling to find a manageable mortgage option. However, with this new loan program we are able to work through previous complications.
Some of the advantages to a USDA/RD loan are:
• Non traditional credit acceptance
• No down payment required
• No monthly mortgage insurance
• No cash contribution or cash reserves required
• Seller concessions allowed
• Fixed interest rate with a 30 year term
As with any loan program there are always things to keep in mind when making the decision that best fits you and your family. First of all, most lenders do not accept a credit score under 620. However, having a credit history that indicates a willingness to meet obligations as they become due, and demonstrating that is very beneficial for a borrower to increase their possibilities of being eligible.
With USDA/RD Guaranteed loans it is also important to know that you must meet other requirements. The home buyer must occupy the property as a primary residence. This program is not available to investors or home buyers looking to “Flip” a property. Also, you must meet an adjusted household income and residential property that is within the Rural Development guidelines.
When it comes to the appraisal, the appraiser gives the estimated value of the property based on the conditions of the loan. If the property is being bought as it stands in its current condition then the estimate of value is based on “as is value”. However, if the property is being bought as a development or rehab then the estimate is based on the “as improved value” after construction or rehabilitation. All loans are different and are assed in accordance with state regulations.
It is important that you know what the qualifying guidelines are before deciding if a USDA/RD Guaranteed Loan is what you want to move forward with. Buying a home is not an easy decision. I will review all areas regarding buyer eligibility, property eligibility, underwriting guidelines, and the application process with you. Visit (www.usda.gov) for more information on the benefits of a USDA/RD Guaranteed Loan
**Keep in mind that a property doesn’t need to be in what some consider a “rural area” to be eligible for a USDA/RD loan. An area’s eligibility is dependant on population size. Example: A single family dwelling on a city lot in Chisago City may qualify for a USDA/RD loan.
