The Low-Down on the $0 Downpayment USDA Home Loan3/16/2019
If you’re like me, when someone mentions the United States Department of Agriculture (USDA), I immediately think about farming, food inspections and national nutritional guidelines.
It wasn’t until I became immersed in real estate that I learned about the USDA Loan program - a mortgage program that many Duval, Clay and St. Johns County residents are eligible for. Managed by the Department’s Office of Rural Administration, eligible suburban and rural home buyers can qualify for a 100 percent, no-money-down mortgage backed by the USDA.
How so, you ask? Well, the USDA loan program was made possible by the 1990 U.S. Farm Bill, which established the Rural Development Administration (RDA) to administer programs related to rural and small community development. Currently, the RDA has a $216 billion portfolio of loans and is on track to administer $38 billion in loans, loan guarantees and grants through the fiscal year to support essential services such as housing, economic development, health care, first responder services and equipment, and water, electric and communications infrastructure.
USDA loans are similar to the more-widely know FHA loans in that they are issued by lending institutions and “guaranteed” by a government agency. Additionally, USDA loans are:
- Fixed-interest loans
- Have no prepayment penalties
- Discounted mortgage rates as compared to other low-downpayment loans; the discounted rate is what allows the agency to provide the 100 percent financing option
- First-time home buyers and repeat home buyers are both eligible
As long as the property address is located in an approved USDA zone and loan applicants meet certain income requirements, they are eligible for the loan program. Income guidelines vary depending on the state and county, but for the greater-Jacksonville and surrounding areas, household income of 4 people cannot exceed $82,400 and for households of 5 people, the income limit is $109,150.
Here’s a link to the official site: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do, where you can learn more about the program. And certainly, give me a call and I’m happy to answer your questions.
- Mabel Perez, Real Estate Maven
(Photo credit: Freestocks.org @ Pexels)