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Buying a Home with No Money Down – USDA Option

March 25, 2013

USDA Home Loans

USDA loans are designed to help with the purchase of a home by mid- to lower-income buyers in rural and suburban areas who may have trouble qualifying for a conventional mortgage loan. There is no down payment associated with a USDA mortgage. There are two types of USDA loans available for new home buyers.

  • Loan guarantees. These loans are issued by traditional lenders like banks and mortgage companies. They’re backed by the U.S. Department of Agriculture and allow borrowers to obtain low mortgage interest rates, even without a down payment. Note that mortgage insurance may still be required if you put little to no money down on the deal.
  • Direct loans. These loans come straight from the USDA, rather than through a bank or mortgage company, and are made for low- and very low-income families. Applicants must meet loan qualifications, but interest rates may be as low as 1% for these home buyers.

Qualifying for a USDA Loan

Income requirements for a USDA loan vary by household size and geographic region of the country. Other requirements include:

  • U.S. citizenship or permanent residency
  • A monthly payment of no more than 29% of your total monthly income
  • Proof of consistent income over the past 24 months
  • An acceptable credit history with no accounts in collections over the past 12 months. A credit score of 640 or more receives streamlined processing.

Homestead Financial Mortgage is Here for You

If you have questions about no-money-down mortgage loans – or any other type of mortgage – Homestead Financial Mortgage is here for you. Our experienced loan officers are happy to provide information and help you determine which type of mortgage will work best for your situation. The process may seem complicated at first, but our goal is to make it as simple as possible for you. 

Homestead Financial Mortgage has branches in St. Louis, MO, Overland Park, KS, and Godfrey and Glen Carbon, IL. We also serve the metro areas surrounding these cities. Give us a call today with your no-money-down mortgage questions. We look forward to working with you! 

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