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The Zero Money Down Mortgage Loan that Can Land You Some Land

Family in yardLife has its challenges. And if you're a young adult just getting started out on your own, you already know that making smart financial decisions about your future can be one of the biggest challenges of all. 

 

Where do you even begin? You're already paying down your school loans, financing a new "used" car and writing the monthly rent check. Then there's groceries, utilities and weekends out with your friends. How will you ever begin to think about buying your first home? Doesn't that require a 20 percent down payment? Yeeks! 

Solutions

We've got good news! There's a home loan designed for first-time homebuyers that offers 100 percent financing. It's called the USDA Rural Development Mortgage (RD) program and it can help you buy a home in a rural or suburban area with zero-down payment, minimal investment and low interest rates. This loan is insured by the U.S. Department of Agriculture to promote homeownership in less-dense communities and is often a good option if you're buying your first home or having trouble saving for a down payment.

Qualifying

Eligibility is determined by home location, income level and other requirements. Once you apply for a loan for a property that qualifies under the program (don't be alarmed, a huge portion of the country qualifies), your lender will look at your monthly debt total, excluding your rent. If the payments are 41 percent of your income or lower and your credit is good, chances are you can qualify this loan. Once you qualify, you may buy, build, rehabilitate, improve or relocate a dwelling in an eligible rural area.

Access

The USDA works with private sector lenders like Amerifirst to generate these loans. The RD program offers considerable flexibility when it comes to the other costs with a mortgage, like closing costs, and allows the seller to pay all of the expenses. You can find the areas that this program covers by reaching out to us or by using the USDA's website.

Benefits

A program like this can help you overcome the biggest barrier to owning a home - the down payment. The savings can be the difference between getting your own home and continuing to write the rent check. Let's take a look at the down payment for a typical conventional loan.

 

Example:

Conventional loan, 3 percent down payment*

Home price: $150,000

3% down payment: $4,500

 

With a USDA RD loan, you won't need to come up with $4,500 for a down payment. If you have a small savings account, you can use it to buy a couch and easy chair for your new living room instead!


Wondering what other home loan options are available? Download our ebook, Find the Right Mortgage for You. 

  

Loan Options Guide

 

  *30-year fixed rate, 5% interest rate

 

Related Posts

5 Reasons Not to Skip Your Home Inspection

You found a house you love—hooray! But with lots of other buyers breathing down your neck, you feel like you need to act fast. To make your offer more attractive to the seller, you might be tempted to skip your home inspection, but here are five good reasons not to! 1.) Not all problems are obvious. It’s easy to spot issues like a crack in the sink or a broken light fixture. But do you know how to recognize foundation problems, termite infestations, outdated wiring, or sewer system problems? Trained home inspectors do and taking the time to have them go over the entire property before you sign the papers can prevent you from buying a headache instead of a home. BOTTOM LINE: The great thing about an inspection is that if you see major problems you’re unwilling to take on, you can change your mind and walk away. 2.) You may not be able to afford the repairs. If you’re like many new homeowners, you may not have much set aside to pay for needed repairs after saving up for your down payment and closing costs. While you may not mind waiting a bit to repaint or update appliances, waiting on problems like leaky roofs, broken plumbing, or infestations will only make them worse, and some issues, like broken furnaces, may need to be repaired right away. BOTTON LINE: You don’t want to go deep into debt to keep your home safe and comfortable. Instead, it’s worth negotiating with the seller to pay for repairs. If they refuse, you can simply walk away. 3. Some problems can make it harder to insure the home. Getting home insurance is essential because lenders need to see an insurance policy before you can close on your home—and of course, you’ll want to have your home protected in case anything goes wrong. However, some companies may decide that your home’s older electrical systems, plumbing, or building materials make it too risky to insure. BOTTON LINE: If essential updates are needed, the only choices are to ask the seller to pay for them, pay for them yourself if you can afford it, or walk away from the deal. 4. Serious issues can affect the resale value of the home. Your home is probably the biggest investment you will ever make. However, if it has major problems, instead of building your wealth, it could turn into a lousy investment that threatens your financial well-being. BOTTON LINE: While a home inspection typically costs a few hundred dollars, it’s an excellent investment in your peace of mind and financial health. 5. Some problems can threaten your family’s health or even your life. This sounds scary, but it’s no exaggeration. Issues like lead paint, black mold, radon (an odorless radioactive gas), or carbon monoxide leaks can cause serious and sometimes fatal health problems. BOTTON LINE: These issues are also easy to miss without a professional home inspection, and it’s simply not worth taking the risk. While it’s not easy to compete with other buyers who are bidding for the house you want, home inspections are one area where you don’t want to cut corners. To protect your physical, financial, and mental health, there’s no substitute for a professional home inspection.

6 Tips on How to Buy a House in Today's Market

Buying a home may be the American dream. But with escalating home prices, rising interest rates, low inventory, and inflation, as a first-time buyer, you may be wondering if that dream is out of reach.

Let's Talk FHA Loans

  If apartment living is getting old, or you've outgrown your parents' basement and house rules, you may be thinking about buying your own place. For this reason, you may be interested in learning about home loans that offer low and no-down payment options and have flexible lending requirements. One of these is the FHA loan. Let's take a closer look. 

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