Zero Money Down USDA Mortgage

Understanding the No Money down USDA Mortgage

Buying a home in Wisconsin with no down payment is still a reality thanks to the USDA program.  The Rural Development section of the United States Department of Agriculture (USDA) has made great strides in the past two years to educate loan officers and potential borrowers of the benefits of this program.  The mortgage offered by the USDA is quite different from other programs and is a great way for people to purchase a home without a costly down payment.

Mortgage Insurance

Unlike conventional loans and FHA loans, the USDA loan does not require any mortgage insurance.  This means that every dollar of every payment is going towards the principal, the interest or the escrow for the home.

Closing Costs Paid by Seller

A conventional loan allows the seller to pay closing costs up to 3% of the purchase price.  Similarly, FHA will allow the seller to pay closing costs up to 6% of the purchase price.  However, USDA has no limit on the amount that can be paid by the seller.  This means it is possible to find a house and purchase it without paying a down payment or any closing costs.

Property Location

In order to be considered for the USDA loan a home must be located in an area designated as rural by the USDA.  However, would it surprise you to learn that of the 72 counties listed in Wisconsin, 50 of those counties are considered rural?  And the remaining 22 counties have sections that are considered rural. This means that there are numerous homes that could be eligible for this type of loan.

Income Limits

There are also some limits on the person’s income.  The USDA bases the limits on the total number of people that will occupy a home.  For example, a family made up of a mom, dad, and three children under the age of 18 will be allowed more income than just a married couple.  A Wisconsin loan officer can look up the limits for each county and let you know if you meet the guidelines.

Loan Limits

The maximum amount allowed for a USDA loan is different for each county in Wisconsin.  However, the limits are very liberal.  Some counties, such as Ozaukee and Dane, will allow qualifying borrowers to get a loan up to $230,000.

Not For Select Buyers

Some people are under the impression that the USDA loan is only for Wisconsin borrowers looking for their first home.  However, nothing could be further from the truth.  People buying their first home or their fifth home can use the USDA loan.  The only stipulation is that the property must be the borrower’s primary residence.

It has been mentioned in the news a lot in the past three years that mortgage rates are at an all-time low.  When rates are so low it is only a matter of time before they start to rise.  Take the opportunity to talk to a Wisconsin loan officer and find out if you can get a home using the USDA loan.

This communication is provided to you for informational purposes only and should not be relied upon by you. Rock Realty is not a mortgage lender and so you should contact a USDA lender directly to learn more about its mortgage products and your eligibility for such products.

Original Post - Understanding the No Money Down USDA Mortgage

View a home without leaving your house!

A new listing comes on the market that catches your eye. The interior photos look bright and inviting, while the exterior shots show well cared for landscaping that give the home great curb appeal. This could be the one you've been waiting for!

You immediately call your realtor and set up a personal showing for the next day. After taking off a little early from work to see the home in good daylight, you arrive at the property.

What awaits you is the dissapointing realization that your dream home is locating directly next to a busy gas station!

Of course this situation could have been avoided if you or your real estate agent had previously driven by the property, but often due to busy schedules it is hard to find the time. A more simple solution is to utilize a couple of online websites to view the exterior of most homes from your computer desk!

The first website I would recommend that you use is Google Maps. Simply type in the address of the location you are interested in. You will first be given an overhead street view of the neighborhood. This alone can help reveal the property's true location. I've included photos of the Capitol Building in Madison Wisconsin for dramatic effect!

Now, use the ‘+' sign on the left hand side of the screen to zoom to a closer overhead view. When you get close enough, Google Maps will actually convert your the view into a Street View. This will show you what the home looks like from street level. You can even turn left or right to look up and down the street.

For overhead shots, I actually prefer what Bing Maps has to offer. This site has more clear overhead views. You simply need to select ‘Birds Eye' from the menu at the top. On this site you are able to rotate your view by 90 degrees at a time. This can give you an idea of how large the trees in the backyard are, if the house has a fenced in yard, or where the shed is exactly located.

Using sites like these is just another tool a potential home buyer can use to narrow down the field of potential properties. I use this tool as a realtor almost every day and it really has helped me be that much more efficient. I hope it can help you as well!

WHEDA Advantage Loan Program

Are you a first-time buyer? Do you want an affordable home loan with a fixed rate and 100% financing? If so, then you are in luck. Wisconsin Housing and Economic Development Authority (WHEDA) has partnered up with Fannie Mae to bring affordable housing to qualified first-time buyers. You can find a link to WHEDA's site on Rock Realty's home page. Here are the features you will find on their site:

FEATURES AND BENEFITS

-Low cost, 30-year fixed interest rate – Ensures the rate on your mortgage will never increase

-$1,000 minimum borrower down payment – Reduces the cash you need to close your loan

-Reduced mortgage fees – Your mortgage will cost less thanks to the elimination of fees commonly found with other traditional loan products

-You may be eligible for the Federal First-Time Home Buyers Tax Credit if you enter into a contract by April 30, 2010 and close by June 30, 2010

-If you involuntarily lose your job during the first two years of your mortgage, WHEDA’s job loss mortgage payment protection will cover up to six months of payments.

There are eligibility guidelines as well as income and purchase price limits to this program. You can find them on WHEDA's site too. Buyers are required to take a home buyers seminar and pass the WHEDA pre-approval. These are good things. You should be educated on owning a home and the pre-approval varifies you ablility to own a home long term. Don't feel bad if you miss the tax credit that expires in May. Rock Realty offers buyers 1% of the purchase price to their closing costs.

There are new programs for those looking to purchase foreclosed homes or home owners wanting to make improvements and repairs to their home. You can find information on these programs with the same link. Good luck and please leave a comment.