Does a home loan with no down payment and decent rates sound too good to be true? It isn’t.
Before we get into the details, a bit of background. The USDA provides extremely attractive loans to people in certain rural locations, as an enticement to settle down and develop new areas of the country. The Department of Agriculture uses population data from the US Census and other factors to determine which areas of the country count as “rural,” and then allows buyers in these areas (who meet a few other requirements) to get a USDA-backed loan from an approved lender.
If you’re a candidate for one of these loans, there’s no time like the present to apply, and we’ll leave the qualify button here (don’t worry, it’s zero obligation). If you need more info, then here’s what you need to know.
What Makes USDA Loans Special?
Ag Department-backed financing is so attractive because it requires no money down but still has rates competitive with other government mortgage products. USDA mortgages only require a small annual fee (a fraction of the FHA’s rates) and an upfront premium of 2% of the loan amount. However, that premium can be rolled into the mortgage, giving buyers the option of getting financed with a 0% down payment.
What’s The Catch?
There are several requirements to meet in order to qualify, most important however, you must live in a specific area defined by the USDA as rural. The department provides a map showing which regions are eligible here.
What If I Already Have a USDA Loan? Can I Still Refinance If My Area Loses Eligibility?
Don’t worry. If you’ve already got a USDA mortgage, you’re done worrying about regional eligibility requirements. As long as you still meet other requirements, you should be able to refinance.