100% USDA Home Loans For Buying A House With Bad Credit With No Money Down

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The USDA Farm Home Loans program provides low interest fixed monthly mortgage payment terms to help low and moderate income households afford a house of their own to keep the family together. In such difficult economic conditions, such rural home loans from the United States Department of Agriculture, Rural Development Branch, can offer better credit flexibility compared to traditional lenders in the troubled and sluggish housing and lending market.

Do not be too put off by the "rural home loans" name of this program since many semi-rural properties just outside city limits also fall within the USDA farm home loans eligibility and will not seriously affect your transport options and commuting time to work or schools in the city and business district.

That is a small price to pay in return for 100% mortgage financing and no down payment home loan financing under this USDA rural development farm home loan program. Lack of funds for down payment towards buying a house is the biggest problem faced by many low and middle income families in the country.

With the new Housing Rescue Bill passed in 2009, seller funded down payment assistance and zero down FHA mortgage lending are banned, leaving many bad credit home buyers that cannot meet the minimum 620 FICO score guidelines and down payment limits without any options.

However, many do not realize that it is still possible to buy a house with no money down via USDA farm loans. You can now avoid home ownership problems by borrowing up to 100% of the latest appraised value of the house you have in mind that falls within the USDA rural housing districts.

USDA Rural Farm and Housing Loan Qualifications

The USDA Guaranteed Home Loan has a fairly easy and prompt approval process, and the available federal funds for this rural housing service program are not facing any shortages so far. Compared to FHA house mortgage loans, there are no monthly PMI private mortgage insurance necessary and only a 2% upfront fee is charged which can be financed by the loan as well.

You get a 30 year low interest fixed rate rural mortgage with zero early prepayment penalty. The government underwrites and guarantees all USDA rural home loans made by the private lenders such that they will be reimbursed in the event that any borrower defaults on the repayment. As with the usual FHA arrangement, house buyers work with approved USDA home loan lenders directly while the government plays the role of the guarantor and underwriter. Monthly mortgage repayments are thus made directly to the lender and not the USDA.

How Can I Apply For A USDA Home Loan With Bad Credit And No Down Payment?

This USDA housing loans assistance program has quite lenient loan requirements compared to private and even the latest FHA mortgage guidelines. Although you need to demonstrate a stable employment record for the past two years and your income must meet the relevant limit guidelines on the area where you intend to buy a house with USDA farm loans, there is no minimum FICO credit score requirements to be concerned with.

The given USDA rural development loans can be used on buying new houses, existing homes, new construction and home improvement projects. Although the USDA rural development loan rates are very low, note that all repairs, renovations or new constructions must be done by a licensed contractor if you intend to do 100% USDA home loan financing.

Finally, all the upfront fees and USDA closing costs can be financed by the seller, with 100% gifting arranged allowed such that borrowers do not need to come up with any minimum cash contributions. If you are a first time home buyer or have not owned a home over the past three years, the USDA home loans also allow you to use the Housing Rescue Plan HR3221 bill to buy a new home with no money down and still get up to $7500 of tax rebates. This tax credit must be paid back over a 15yr period at $500 a month interest free starting the following year.

USDA Rural Home Loan Rates

Based on current USDA rural home loan rates and the median rental costs in the same sub-rural residential area, you can buy a home with appraised value of $175,000 that costs just as much as if you were to pay for rentals. Many families have to use a large portion of their income for rental property and never get to fully own a house of their own due to problems coming up with the down payment.

With 100% USDA home & farm loans, these low income families can now truly buy a home with no down payment and on low mortgage interest rates. The exact USDA home loan rates offered is determined on a case by case basis depending on the total income of the borrower and financial status of the household.

For example, a single mother with 3 dependent children can expect as low as 1% USDA home loans rates under the government subsidized mortgage program. For families with higher income or two working parents, the rates are still very competitive compared to private mortgage loan rates.

Note that applying for farm loans does not mean you will be living like a farmer, giving up on convenient amenities in the city and quiting your office job to start growing apples. Most sub-rural properties that meet the USDA loan eligibility locations are not more than 30 minutes drive from the nearest major cities.

You get to enjoy living in less densely populated areas and the USDA rural development loan will also finance land up to five acres. Before you buy a new manufactured home and land package, their staff will also help you inspect the property in detail for to make sure it is built according to safety specification codes.

If you have been denied from other government assisted mortgage loan programs due to poor FICO credit score or lack of funds for the down payment, upfront fees, mortgage closing fees etc, you should seriously consider applying for USDA rural development loans instead of continuing to pay money on rentals as tenants. Many households have already benefited from being able to buy a house with no money down using 100% USDA home loans financing and more families are starting to join the program.