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Tina Howard

If you feel at home in a town surrounded by pastures, or ever asked yourself: “I’d love a zero-down option for properties in eligible areas,” here’s a home buying solution we have in-house.

Designed to promote homeownership, the USDA program allows buyers to purchase or refinance a home without a down payment while obtaining an interest rate lower than other loans.

What Is It?

USDA-backed mortgages serve these borrowers to promote rural and suburban living. The primary advantage is that the borrower doesn’t pay a monthly mortgage insurance; making the monthly payments more affordable.

What Makes It So Great?

Don’t underestimate the power of the USDA:

No Down Payment: But, if you put little or no money down, you will have to pay both an annual (0.35% of the total loan amount) and monthly service fee (1/12th of the annual fee).

Low-interest and mortgage insurance rates: With subsidies, interest rates can be as low as 1%.

Not limited to first-time homebuyers: Unlike other loan programs, daycare expenses and other allowable expenses may be deducted from your annual income to help keep you under the limit.

But Do I Qualify? 

It might seem pretty niche, but there’s more coverage than you think:

Income: Each county has a specific income limit for USDA eligibility. And your income can’t exceed that limit. Based on this USDA map of requirements, many low- to moderate-income families and individuals can qualify.

Credit Score: A FICO credit score of 600 or greater meets the minimum requirement. Those without a credit score can qualify for “non-traditional” credit references, such as rental and utility history payments. For bankruptcies/foreclosures, take about three years to build yourself up for USDA eligibility.

Property: So “rural” can seem very, very vague. Basically, the term means not: 

  •  within a city, town or incorporated area that has a population of greater than 20,000 residents
  • an urbanized area contiguous and adjacent to a city or town that has a population of greater than 50,000 residents

Even if you think you’re not qualified for a USDA loan, contact your local FBHL Loan Officer (who are USDA-approved) to find out for sure.

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