How to Buy a Home with Zero Money Down!

- May 31, 2023

scott andrew alpaugh big silver number zero

Hey there, welcome to my blog! Today I'm going to talk about something that might interest you if you're looking for a way to buy a home with no money down. That's right, I'm talking about USDA zero down loans.

What are USDA zero down loans?

USDA zero down loans are mortgages that are backed by the United States Department of Agriculture (USDA). They are designed to help low- and moderate-income borrowers purchase homes in rural areas. The USDA guarantees the loan, which means that if you default on your payments, the USDA will pay the lender instead of you. This reduces the risk for the lender and allows them to offer you a loan with no down payment required.

How to get a USDA zero down loan?

To qualify for a USDA zero down loan, you need to meet some eligibility criteria. Here are some of the main ones:

- You must be a U.S. citizen, a U.S. non-citizen national, or a qualified alien.
- You must have a steady income that is within the income limits set by the USDA for your area. You can check the income limits here: https://www.rd.usda.gov/files/RD-GRHLimitMap.pdf
- You must have a credit score of at least 640, or be able to explain any negative credit history.
- You must agree to occupy the home as your primary residence.
- You must purchase a home that is located in an eligible rural area. You can check the eligibility map here: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

If you meet these criteria, you can apply for a USDA zero down loan through an approved lender. You can find a list of approved lenders here: https://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-loan-program/interested-applicants

What are the benefits of a USDA zero down loan?

There are many benefits of getting a USDA zero down loan, such as:

- You don't need to save up for a down payment, which can be a huge obstacle for many homebuyers.
- You can get a low interest rate and low monthly payments, which can save you money over time.
- You don't need to pay for private mortgage insurance (PMI), which is usually required for loans with less than 20% down payment.
- You can use the loan to buy a new or existing home, or to build, repair, or renovate a home.
- You can choose from various loan terms, such as 15, 20, or 30 years.

What are the drawbacks of a USDA zero down loan?

As with any loan, there are also some drawbacks of getting a USDA zero down loan, such as:

- You may have to pay an upfront guarantee fee and an annual fee to the USDA. These fees help cover the cost of the loan guarantee and reduce the need for taxpayer funding. The upfront fee is 1% of the loan amount and can be rolled into the loan. The annual fee is 0.35% of the loan balance and is paid monthly along with your mortgage payment.
- You may have limited options when it comes to choosing a home. Since the loan is meant for rural areas, you may not find many homes that suit your preferences or needs in an eligible area.
- You may face stricter appraisal and inspection requirements than other loans. The USDA wants to ensure that the home you buy is safe, sanitary, and meets their minimum standards.

Is a USDA zero down loan right for you?

A USDA zero down loan can be a great option for you if you want to buy a home in a rural area and you have a low or moderate income. It can help you achieve your homeownership dreams without having to worry about saving up for a down payment or paying high interest rates.

However, before you apply for a USDA zero down loan, you should do your research and compare it with other loan options. You should also consult with a financial advisor and a real estate agent who can help you understand the pros and cons of each option and guide you through the process.

I hope this blog post was helpful and informative for you. If you have any questions or comments, feel free to leave them below. Thanks for reading and happy house hunting!