Is A New Home With 0 Down Financing Your Future?

There’s a new home out there with your name written all over it. In fact you can buy that home with 0 down financing.

Yes, even if you don’t have a down payment, even if you don’t have enough money for closing costs you can buy a home.

With the United States Department of Agriculture Rural Development loan, USDA RD,  you too can join the ranks of homeowners and kiss the rental life good bye. This loan requires no down payment and will allow you to finance in your closing costs.

The rural development loan is a regular loan. There is nothing tricky or exotic about it. It is a traditional 30 year fixed mortgage. Which means your interest rate stays the same and the only way you payment will change is if your taxes and insurance increase or decrease.

The interest rates with this loan are a little bit higher than a traditional loan. Typically they run about a half of one percent higher. Which, if you think about it, that’s not too bad at all for not needing a down payment.

Even though this is 0 down financing, there are still costs associated with getting this loan. These costs include but are not limited to lender fees, title and escrow fees, government fees, appraisal etc. These fees normally add up to between 3% to 6% of the loan amount.

But don’t worry.

There are two different ways to make the purchase of your home true 0 down financing.

Here is the first way. The USDA allows the seller to pay up to 6% of the purchase price towards your closing costs. Since most closing costs are between 3% and 6%. This is normally more than enough to cover all of the fees.

The second way, is that if the home appraised for more than what you are buying the home for. You can actually finance your closing costs into the loan. There is a limit of $10,000 that you borrow extra to cover the costs. Most of the time the $10,000 is way more than you will ever need.

If there are repairs that need to be made to the home, you can finance the costs into the loan as well. Again the $10,000 figure still stands. As well as the need for the home to appraise for more than what you are buying for.

0 down financing  for homes is still alive and well. So if you have been sitting on the sidelines waiting to jump in because you were lacking funds, you now don’t have any more excuses.