Are Zero-Down Mortgages a Thing of the Past?

“So much has changed”
“I miss miss the good old days”
“Things aren’t what they used to be”

These catch phrases apply to many situations… including mortgages. For those who haven’t gone through the home buying prices for many years, so much  has changed concerning income, assets and credit scoring. One of the things that hasn’t changed is most loan programs require a percentage down to purchase a home. But is there still a  zero-down product out there?  Yes!

There are several ways to get a zero-down home loan. USDA Rural Housing programs, VA loans for veterans, and FHA mortgages combined with down payment assistance all achieve the zero-down objective. Here is a rundown of the USDA program and what is required.

USDA Rural Development Home Loans

USDA loans are 100 percent zero-down mortgages designed to make it easier for people to buy homes in rural areas of the country including many homes in Indiana. To get a USDA mortgage, your property must be eligible (primary residence in a designated rural area) and you must be eligible too (income cannot exceed 115 percent of the median household income for your area). Perhaps to your surprise, much of the U.S. is considered rural. To see if your area qualifies, you can check the property’s eligibility on the USDA website. You can check your income eligibility as well.

Unlike the VA and FHA home loans, the USDA sometimes actually lends you the money to buy your home. This is called a Direct Loan. A Direct Loan interest rate is set by the government.

Moderate-income borrowers can get USDA Guaranteed Loans, in which the money comes from private lenders.

It’s always best to check with your lender for the latest rules and qualifications for a zero down loan. As with most anything, regulation
s and rules can change. We’d love to answer any questions you may have about USDA loans. Give us a call at 765-450-8933 or submit your question online.