The 0% Down USDA Loan

Did you know, you can buy a home with ZERO down?!!!! USDA Rural Development offers qualifying individuals and families the opportunity to purchase or build a new single family home with no money down, to repair their existing home, or to refinance their current mortgage under certain qualifying circumstances. There are also programs to assist non-profit entities in their efforts to provide new homes or home repair to qualifying individuals and families.

What is the interest rate and payback period?

  • Effective July 1, 2022, the current interest rate for Single Family Housing Direct home loans is 3.25% for low-income and very low-income borrowers.
  • Fixed interest rate based on current market rates at loan approval or loan closing, whichever is lower
  • Interest rate when modified by payment assistance, can be as low as 1%
  • Up to 33 year payback period – 38 year payback period for very low income applicants who can’t afford the 33 year loan term

How much down payment is required?
No down payment is typically required. Applicants with assets higher than the asset limits may be required to use a portion of those assets.

How to apply for a USDA loan

If you meet the USDA loan qualification criteria and you’re ready to buy a home, here are next steps:

1. Compare and contact USDA-approved mortgage lenders

Here’s the current list of USDA lenders by state. (If you’re planning to build a home, here’s the current list of USDA construction loan lenders.) 

2. Get prequalified for your USDA loan

For a preapproval, be prepared to provide information about your financial situation, including assets, debt and income, as well as employment history. 

3. Find a home in a USDA-approved area 

Work with an agent who has experience with USDA loans (like me!). Once you find an eligible home you like, let’s make an offer. If it’s accepted, you’ll sign the purchase agreement with the seller, provide any initial earnest money deposit and complete the application process for your mortgage. Search for available rural homes for sale in Southeast Minnesota by visiting my website Southeast MN Homes. To see if a property is eligible for a USDA loan, vist the USDA Eligibility Site.

To learn more about the program, visit the USDA Rural Development Single Family Housing Program Website.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s