If someone tells you that they bough their new house with a USDA Rural Development mortgage, do you picture them living on a farm down a dirt road with chores like milking cows at dawn? Does "rural" make you think of a sea of corn stalks with a house plopped in the middle of the field?
While the term rural can certainly cover all of these situations, it doesn't exactly cover the zero-down payment mortgage loan option USDA Rural Development. Watch the short video below for a little more information.
See the embedded video here - Rural Development: Not What You Think
With the USDA Rural Development option, you can borrow 100% of the appraised value. This means you don't need to come up with the down payment. In fact, you can actually borrow 2% more than the appraised value, and use the extra to make some light repairs or home improvements. The main requirement for a USDA Rural Development mortgage is that the property must fall within certain geographical areas, outside the city limits of major metropolitan centers.
Now, this doesn't mean you have to live "way out in the country." While that is an option if it appeals to you, many areas that fall under the Rural Development umbrella are actually more suburban than you'd expect. As an example, rural development in northern Indiana covers most areas except Gary, South Bend and Fort Wayne. Other villages, towns and areas are eligible.
Under the Guaranteed Loan program, USDA Rural Development guarantees loans made by private sector lenders like AmeriFirst Home Mortgage. A loan guaranteed through RD means that, should the individual borrower default on the loan, RD will pay the private financier for the loan. You work with AmeriFirst and make your payments to us.
*no down payment refers to only the cash down payment - it does not include possible fees associated with cash to close (like inspections and escrow funding)
USDA Rural Development property eligibility: http://afhm.tv/IsItRural