With a USDA Home Loan you can purchase a new or existing home that you intend to live in. It is available to help families buy a home with No Down Payment in Rural Designated Areas.
While most homes will qualify for this program - there are a few items you should be aware of to avoid any surprises down the road.
- You must occupy the home. (No Rental Properties)
- The home may not be located in a Flood Zone.
- The home may not be used for income producing purposes. (Farm, Rental,etc)
- Streets & Roads should be paved, but can have an all weather surface such as gravel if it is typical for the area.
- The property may not be subdivided.
- If the home is on a larger piece of land such as acreage than the value of the land cannot be more that 30% of the total value. For Example:
Lets say you find a nice home on a one acre lot. If the purchase price of the home is $250,000 than the value of the land cannot exceed $75,000. This is not a very common problem but it is something to be aware of since allot of the homes in these "rural" areas tend to be on larger lots.
Last but not least: The home may not be on the Historical Homes Register. This again is not something that happens often but we have seen it. If the home is 50 years or older than USDA Rural Development must get this information from the State Historic Preservation Office. This can take a while and may delay your closing if you are not aware of it from the start.
There you have it! You can buy a nice home in a rural area with No Down Payment, a Lower Monthly Payment and save a ton of money.
You can apply for a USDA Home Loan here. Never assume that you or the home you would like to purchase will not be eligible for a USDA Home Loan. Always speak to a qualified USDA Lender first.
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