Program Focus: USDA Loans
If you’re looking to buy a home in a rural or suburban area but don’t have a down payment, you may want to look at a USDA loan. As an option with 100% financing, this may open the door to homeownership for you!
This U.S. Department of Agriculture (USDA) loan isn’t just for farms, as part of the Rural Development program, you can get a home loan with no money down if the home you’re looking to purchase is in a qualifying area. This is a great option for homebuyers with lower incomes or who have gifts, grants, or seller contributions to use as down payments. And, you don’t even need to be a first-time homebuyer.
How It Works
The most common type of USDA loan is a guaranteed loan issued by a local lender like Hamilton Group Funding. In order to qualify, you need to generally meet these guidelines:
- Show documented, reliable income for the past two years
- Be a U.S. citizen, U.S. non-citizen national, or qualified alien
- Have a debt-to-income ratio of less than 41% including the mortgage amount
- Good credit history without any accounts going to collections for at least 12 months
- The buyer must not make more than 115% of the median income for the region
- The home will need to be your primary residence
One of the benefits of these loans, in addition to no down payment required, is that people with a lower credit score may still qualify if they can show good payment history through utility bills and a rental property. With a 30-year, fixed-rate mortgage giving you 100% financing, this is a very good loan option.
What Type of Home Qualifies
Generally, these loans are intended for purchasing homes in rural areas, however, some suburban areas qualify. The home should be 2,000 square feet or less and depending on its location, there are maximum loan limits. It also needs to be a single-family property.
The goal of the USDA loan program is to help people of modest means afford homeownership in rural America. If you think you may qualify for this program and have a home you’re looking to purchase, let one of the financial specialists at Hamilton Group Funding help. We’re happy to answer your questions and assist in finding the right loan for your home purchase. Contact your local branch today for more information.