USDA Home Loan Program – The 0% Down Bonanza You’ve Never Heard About

by Darwin on November 23, 2009

The USDA loan program is offering, and has been for years, home loans at incredible terms even following the housing collapse, under the edict of rural lending (farm loans) given the challenges faced in finding a mortgage loan or deriving high income in sparsely populated areas.  The surprise is – many of the zip codes enjoying the benefits of the USDA rural development program are in relatively typical suburbs of major cities.

Incredible Benefits of the USDA Rural Loan Program

  • The only actual NO Money Down Loan you can get anymore
  • NO PMI
  • No Loan Amount Limits
  • No Assets needed to qualify

How does the USDA Farm Loan Program Work?

  • All mortgages are conventional 30-year fixed rate mortgages
  • Both new and existing home purchases are eligible
  • Credit Score of 580 is needed (see the ONLY way to get a Free Credit Score)
  • The income limits for the Guaranteed Loan Program vary by state

Here’s the amazing bonus opportunity – if you’re eligible for the home buyer tax credit, you can actually MAKE money on your home purchase, right?  If you keep your transaction costs down and pick up say, a $6,500 tax credit, this can actually be a money maker right from the start!  Think about it – 0% down, a few grand in moving/closing fees matched with several thousand back on a tax credit.  It’s a pretty incredible deal.

While the program is supposed to be geared toward low income families, some of the state limits I found during a cursory search showed pretty high limits, especially for a large family.

While some will inevitably question whether this loan program is another bubble waiting to burst due to the preponderance of no down payment loans going into default now, USDA officials have argued that their program is much less prone to speculative buying and their underwriting criteria are much more strict than the Wall-Street model of buying and selling loans from anyone willing to sign on the dotted line regardless of assets, income or liabilities.

Does this sound too good to be true? Normally, when it does, it is.  However, in this case, if your family qualifies, it’s the real deal.  Thousands of Americans are qualifying and the government’s endorsing it, so if you’re lucky enough to qualify, you might as well take advantage of the USDA Farm Loan Program.

If you don’t qualify, you can always check out a 40 year loan for a lower monthly payment than a 30 year conventional or check the refi/mortgage info page for more on how to find the best mortgage rate, avoiding the lender traps and how to perform your own NPV to confirm you’re going with the best deal.

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{ 18 comments… read them below or add one }

1 pkamp3 December 10, 2009 at 1:14 am

Count me as one of the skeptical ones:

“USDA officials have argued that their program is much less prone to speculative buying” doesn’t jibe well with “Credit Score of 580 is needed” for me. Thanks for finding this program, this is the first time I’ve seen it. Great post!

[Reply]

2 Sam Winland January 8, 2010 at 12:06 pm

I am interested in a no money down loan

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3 Mis sold Mortgages February 22, 2010 at 10:14 am

On a slightly different note, secured borrowing on property can lead, it seems, lead to finding you have been mis sold mortgages.

I read earlier this year that a lady who borrowed less than 10k with her home as security lost her job, was told that the payment protection insurance could not payout because of implications to do with her partner (the main bread winner).

The solicitor she contacted found traces of severe professional negligence and ended up making a claim against bother the mortgage broker and lender for wrongfully giving her a self cert mortgage.

This is just one example of why credit is so hard to come by these days… Money hungry people!

[Reply]

Mis sold Mortgage Reply:

@Mis sold Mortgages, you have made a valid point here and reminds me very much of the Mis sold Right to Buy Mortgage scandal that has left the less well-off people in the country feeling ripped off by their mortgage broker and solicitor who saw an opportunity to take up to £15k out of the Government discount applied to ex-council tenants.

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James Reply:

@Mis sold Mortgage, spot on! Mortgage advisers would often add on high fees for arranging the loans. Solicitors were equally as guilty, some even making-up quotes for home improvements in order to get a larger mortgage for the applicant, which would cover their own high arrangement fees.

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4 Chrisfs March 15, 2010 at 1:27 pm

Please include a link to the plan when you post something like this

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5 scampfarmer July 21, 2010 at 3:33 pm

Can you elaborate a little on where you found this info? We currently live in Florida, moved here from Ohio in 03 and are contemplating moving back to Ohio again. We’d like to start a small farm in the rural area I’m originally from, but have just been boggled as to how to go about it….I have searched the Farm Credit Bureau websites as well as the USDA in Ohio. The only loan info I came across on the website(USDA) said the program ended in 2005. Any new info would be much appreciated.

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6 GLORIA DELLAFOSSE August 6, 2010 at 11:01 pm

Hello,
Please help us 0%down goverment home loan we don’t have great credit we need all the help we can get.

[Reply]

7 David February 6, 2011 at 10:29 pm

What the blog is referring to is for home purchases in which the land value is less than 30% of the appraised value. This loan is available for single family, town homes, and even condominiums in designated USDA Rural areas. To see the specific county guidelines for income and geographic restrictions reference http://www.USDARuralLoan.com.

[Reply]

8 Joel Lobb February 11, 2011 at 7:48 pm

Great Article about a program that is not very well known about.

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9 شات April 15, 2011 at 2:46 pm
10 Mark Engelke June 3, 2011 at 1:31 pm

my and my fiance live in texas. we both have great jobs. we have been aprroved for loan but they say we make to much money. but we have no money for down payment. so pretty much people that have no jobs can get a place but hard working middle class cant. so the lower families get the loan and then they get it foreclosed on because they cant make they payment. now tell me that makes no sense. any ideas.

[Reply]

rachael Reply:

@Mark Engelke, if you truly are. Middle class how do you except to be approved for a low income loan? Also if you are middle class why not try living below your means, in order to save the money needed for a down payment?

[Reply]

Crystal Reply:

Would just like you to know that your comment is just a bit rude. My family struggles my husband busts his ass working every single day in a factory and he actually does make very good money but we still cant afford to get a decent house for our family. Im so super fning stoked that you and your fiancee have such wonderful jobs but most people dont and those of us that dont need houses to live in also, and just because we dont make as much money as your snooty ass does does not mean that we will fail in making a payment.

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11 Bob Barber June 16, 2011 at 11:33 pm

USDA Home Loan buyer beware. Read the fine print on your section 502 Rural USDA home loan. If anything happens to your income and you unfortunately find yourself in dire straits you will get NO relief from the mortgage company if the loan is a USDA backed loan.

Thats because the mortgage company is going to get the full price of the loan from the foreclosure sale of the home PLUS the difference paid by the USDA. You, the original loaner will then be on the hook for the balance and the USDA will collect the debt from YOU!!!!!!!!!!!!

First hand knowledge on this one. USDA loans aren’t all they’re cracked up to be. Good for first time home buyers as long as nothing happens to your income or your ability to pay the full mortgage in full.

Read the 502 section of the loan program and see for your self. Then be very careful and very sure before you sign.

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12 SEAN KUHN November 3, 2011 at 3:52 pm

This loan isn’t what its caracked up to be. When you are looking for a elidigble property do your homework. My wife and I found a beautifull home in the country which they claimed was eldigble for the loan, 2 weeks from closing they came back and said because the barn on the property was built in the 1900’s they would not give use our loan because it may or may not house live stock and other animals. The kicker is that you can have a new or newer barn on the property and thats ok. I have mad several phone calls and it didn’t do any good. The people at the main office in Indiana were very rude and not very helpfull, they acted like they didn’t care. I would strees strongly do your homework but the problem is they really aren’t very helpfull on giving out the rules and regulations they act like its a big seceret. also if you have a dispute with them on the property they don’t even send out a person or persons to inspect the land they only go off pictures from your appraisal. I feel this is poor business practice but what am I kidding its our United States Goverment they always do the right thing YEA RIGHT .

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13 mary stockman June 26, 2012 at 7:54 am

then why was i turned down with a credit score of 627 and they said i need to up that?

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14 شات مصرى August 30, 2012 at 8:30 am

thanks .. for the’s….

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15 MRS BROYLES December 5, 2012 at 12:32 am

IF MY CREDIT SCORE IS IN THS 500’S AND MY FICO SCORE IS LESS THAN 600, IS THERE ANY HOPE FOR ME BEING APPROVED FOR A USDA HOME LOAN???? PLEASE HELP!!!!!!!!

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16 susan April 29, 2015 at 2:09 am

This is a true story.

I was a single parent raising 4 children. I took out a USDA home loan and bought a nice 2 bedroom (for 5 people) home in 2008. I paid On time for the entirety of the loan.

When the housing market crashed almost immediately after i bought it..my $175,000 home was now worth $139,000. This was the amount I sold it for in December 2014 when I short-saled it. Even though I was not in foreclosure, I had to sell it this way because no bank will loan people money more than the house is worth.

I sell the house, get remarried and never hear from the USDA again.

I pull up my credit report 3 months later and see that the USDA has ASSIGNED me a $44,000 debt (the difference between what the house sold for plus realtor and lawyers fees) ASSIGNED me a $1200 monthly payment and this amount HAS BEEN accruing late fees.

ALL WITHOUT EVER CONTACTING ME.
Im forever in debt to a house that I sold for what They themselves had appraised and agreed that it was only worth.
Had i known any of this I would have never sold it.

I have researched Usda homeloan lawsuits and i do not have ANY paper stating they will collect by any means possible.

Thank You,
Susan

[Reply]

17 Tiffany June 6, 2015 at 12:42 pm

My husband got a pre-approval for usda loan, we found a house and put an offer in and it was accepted. I’m not on any paper work for this loan ect now its time to turn in all the information: bank statements , his pay stubs ect. we have a joint bank account and my employment checks go in there and I have a couple bills that are in my name that come out of that account also will this be a problem and keep him from final approval?

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18 loretta chrisman October 16, 2015 at 12:09 pm

Hello yes I have found a chicken farm with 4 broiler house and 41 ack of land and atrailer house on it , I have been given a contract with REDFAROD to sell my chicken will have five flocks a year. the house r 1800 sq ft. Lee Bamaka wants 680,000 for the farm my credit score is 630i have no money for a down payment .I an a frist time buyer. and I an a women . Can yall please help me to git this farm

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