Good News for USDA Loans
By Jim Palmer Jr.

Many buyers know that there are zero-down-payment loans available for Veterans who apply for a VA loan, but buyers who don’t have a military background may not realize there could be a zero-down opportunity for them too. The US Department of Agriculture provides subsidized and guaranteed loans for low and moderate income families living in rural areas. These loans are referred to as Rural Development Loans and are intended to provide affordable housing opportunities to promote prosperity and quality of life in rural areas.

Since this program is intended to give home ownership opportunities to rural buyers, it cannot be used to purchase inside metropolitan areas. That means these loans can only be used for rural properties and for city properties located in rural towns such as Deer Park, Chewelah, or Colville.
Basically how this loan works is that the borrower asks the seller to pay approximately 3% of their closing costs and because there is no down payment requirement the buyer pays zero dollars at the closing table.
In order to qualify, the buyer must be a U.S. citizen and agree to occupy the dwelling as their primary residence, prove creditworthiness, have dependable income, and show willingness to repay the mortgage by proving 12 months of history with no late payments or collections. 

The home must be in good repair, so a fixer won’t work.  The good news is that now used manufactured homes (attached to property) can be financed with a USDA loan, where in the past only stick built homes qualified. Buyers can expect the USDA loan process to take 30-45 days.

Much like a VA loan, USDA guaranteed loans don’t have PMI (Private Mortgage Insurance), though there is an upfront and annual fee that serves basically the same purpose. The one-time guarantee fee is paid at closing, while the annual fee is lumped into the monthly payment.

These types of loans have not been used a lot in the last few years because it’s been hard to find properties that are low priced enough to meet their requirement.  But times have changed and income levels have been raised along with the cap for sales price. Couple those changes  with the adjustment to allow manufactured homes, and this loan may have become a viable option again for many rural buyers. 

Talk to your preferred lender and ask about this loan type! Then call your trusted broker and get started in your search!