If you think you have to be a member of the military or a veteran to get a zero down payment loan, think again. If you have decent credit and a reliable income and want to buy a home in Wasilla, you may just qualify for a no-down payment loan through the USDA Rural Development Program.
The USDA offers two types of loans, one that is similar to the FHA-backed loan and another which is a direct loan. Let’s take a look at how you can qualify for these mortgages.
The USDA Direct Loan program is for low- to very low-income folks. This means you’ll need to earn less than 50 percent of Wasilla’s Area Median Income (AMI) to qualify as very low income and 50 to 80 percent of Wasilla’s AMI to be considered low income. Just what is the AMI?
It fluctuates each year and it varies according to the size of your family. Find the 2016 AMI on HUD’s website, here.
The guaranteed loan has slightly different income qualifications and allows borrowers to earn up to 115 percent of the AMI.
While the guaranteed loan’s income requirements are more lenient, the credit requirements are a bit tighter. This is because you’ll be applying for the mortgage through a conventional lender, so although you may qualify according to USDA’s qualifications, you may not qualify according to the lender’s credit standards.
Overall, USDA wants to see that you can afford the monthly mortgage payments (which include taxes and insurance) and that you have what they call a “reasonable” credit history. You also cannot own another home within 50 miles of the home you’ll be purchasing.
The home you want to boy must be located in what the USDA defines a “rural area.” This is a town with a population of no more than 20,000 in either “rural towns,” or “open country.” You can check if a home qualifies by entering its address on HUD’s website, here.
Additional qualifications of the home include:
- It must be no larger than 2,000 square feet
- It must not have a pool
- The home must be priced at or below the area’s loan limit (which in Wasilla is $347,600 in 2016)
There are a few other qualifications that your lender can fill you in on.
Finally, the USDA loans are only available to U.S. citizens or legally admitted immigrants, applicants must show that they attempted to get a conventional loan but were unsuccessful and that they are without “adequate” housing.
The Unity Home Group team members aren’t lenders, so if you have questions about these programs, consult with a mortgage professional.