A REAL ESTATE LOAN WITHOUT DOWN PAYMENT USDA 502 Review

11-07-2021

As a new home buyer, it’s a confusing process when researching what types of loans are available and will work for you. I am a veteran living in Carson City Nevada after I was told that with my current income I would qualify for around $ 187,000 using my VA loan, which is $ 70,000 less than the amount needed to buy a home. Fortunately, I came across a government-funded loan that I qualified for $ 287,000, this loan has no down payment or mortgage insurance, plus, depending on income, it may offer a monthly payment subsidy. The loan made it possible to buy a home in rural Nevada. Generally, the income limit is $ 55,000 for a family of four.

The USDA RD 502 Direct Loan is a federally funded loan and the process is difficult at first. To help you understand, I recommend that you contact your state office for assistance with the application process. When you call for help, ask for the Individual Housing representative.

The loan promotes rural areas generally with a population less than 35,000, to help determine property eligibility and determine loan eligibility amount.

According to USDA RD, in general, to qualify, you will have to demonstrate your ability to repay the loan and have a qualifying income based on the area in which you would like to live and,

• Be obtaining a loan from other resources on terms and conditions that can reasonably be expected to be met.
• Agree to occupy the property as your primary residence
• Have legal capacity to incur a credit obligation.
• Meet citizenship or eligible non-citizen requirements
• Not be suspended or barred from participating in federal programs.

(Taylor, 2019)

The main features of the direct 502 loan are no down payment in most circumstances and no mortgage insurance. Another great feature is that the federal government will help you make your monthly payment, allowing you to qualify for a higher loan amount. However, the subsidy has a repayment function, if you sell your home or if you no longer use it as your primary residence.

One last note: the loan process can take up to 120 days from start to finish, contact the USDA RD office in your area for up-to-the-minute details.

Resource

Taylor, J. (2019, December 15). Direct Single Family Home Loans. Retrieved from usda.gov/programs-services/ Direct Home Loans for Single Family Homes / nv.