Dated: 10/17/2019

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United States Department of Agriculture Loans/Rural Development Guaranteed Housing Loan Program - sometimes called a “Section 502” loan

Whether buying a new construction, condo, town home, manufactured, short sale and foreclosed homes, securing a USDA Loan can save you thousands of dollars and get you into your home a lot sooner than you may have thought.

What is the USDA Loan Program?

A USDA Loan is specifically designed for home buyers looking to purchase eligible homes in rural and suburban locations.  The beauty of this particular mortgage is that it offers 100% financing with no down payment. Whether you're a first-time home buyer and or have previously purchased a home, you could be eligible to take advantage of a USDA Loan.

Home Buyer Eligibility?

  • you must be a US Citizen or permanent resident

  • Lower to moderate income families and those with blemished credit may qualify

Closing Costs

So under the USDA there is no need for a down payment but what about your closing costs?  Well, there are ways around receiving assistance with your closing costs!

  • there maybe the option of taking a bigger loan amount to pay for your closing costs if the appraised value of the home is higher than the purchase price.  As a guide, if the sale price is $200,000 and the appraised value is $205,000 - $5,000 is the extra loan amount available to pay for your closing costs.

  • some sellers offer to contribute towards the buyer's closing costs

  • the lender may offer you the option of a slightly higher interest rate which would give you access to additional funds.  For instance, lets say the interest rate is 4% with no credit - but if the interest rate rises slightly to 4.25% there would be an amount of  $3k to pay your closing costs

  • financial assistance from members of your family - Gift Funds - can be used to put towards your closing costs or pay all of your closing costs.

Not all homes for sale can be purchased with a USDA Loan.  For  assistance with finding eligible homes and a Lender, please contact me:

Sue Rowe,
Licensed Realtor®, NHCB
C: 954-790-7706

Sources:  Dan Green The Mortgage Reports Contributor March 1, 2019 - 9 min read
                   Tim Lucas The Mortgage Reports Editor, April 7, 2019 - 3 min read


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