If you thought that being a home-owner was just a dream, you need to know about a government-sponsored program just for people like you. The U.S Department of Agriculture has a loan guarantee program that makes it possible for people with little-to-no down payment to actually buy a home of their own. If you are tired of spending money on rent instead of building equity in your own home, read on for what you need to know about USDA loans.
The myth that USDA loans are only available on farm properties is just that, a myth. As this map shows, many suburban areas of larger cities and entire geographical areas of some states fall within the eligible area. If you think that the area you are interested in is just too developed to qualify, check the map and you may be surprised at what is considered "rural" by the USDA. Click on Property Eligibility on the left menu to display the map. The map allows you to enter exact addresses to check for eligibility or you can just browse and zoom in on the areas available, which are shaded.
One major plus the USDA Section 502 Direct Loan Program is the ability to get a loan with no down payment. The only other method of obtaining a home loan without a down payment is the one guaranteed by the Veterans Administration. The Direct Loan Program is geared toward people with very low-to-low incomes, so your income must be below the limit for your area, which can be searched by state and the metro area on this map.
For people with incomes in the low-to-moderate range, the Guaranteed Loan Program could be right for you. With the higher income allowance comes the trade-off; the no-down-payment option is not available for these loans; however, the down payment required is still lower than other programs at 10%.
It's important to note that the loan guarantee by the USDA doesn't mean that you are guaranteed for approval. Instead, the guarantee is to the lender that makes the loan to you. What this means is that the lender won't lose any money on the loan if the buyer ends up not paying what they owe. Fortunately, this means that the lender doesn't have as much to lose by lending you money for your home under the USDA loan program and is far more likely to approve your loan.
These programs are not well-known, but it's to your advantage to check them out and see if they could be the answer to your dreams of home ownership. Contact a mortgage lender (such as Commonfund; Mortgage Corp) for more information about USDA loans and start packing for your big move today.