USDA – A Great Zero Down Program For Stevens County Buyers
If you are thinking about buying a home in Stevens County or one of the surrounding counties, and have less than 20% down, the USDA Rural Housing loan program is an option you should consider. The interest rate is currently lower than FHA, VA, or conventional loans, and the approval criteria are pretty liberal.
Besides the VA loan program, this is the only true 100% loan program in existence. That means no down payment. If the purchase contract is negotiated correctly, you can get the seller to pay all of your closing costs. All you’ll have in the way of upfront expenses is about $750 for the credit report, appraisal, and a home inspection.
USDA actually has two different loan programs - the USDA Singe Family Housing Guaranteed Loan Program (Section 502 loan) and the USDA Rural Housing Direct Loans (Section 502 Direct) – with the latter being almost completely invisible to the public. The Guaranteed program has higher income limits, and the Direct loan has very low income limitations. Both programs have different qualifying criteria, and your income will determine which program you fall under.
The first qualifying criteria of USDA programs is a limitation based upon your household income. This means they’ll count the income of everyone living in the home over the age of 18 (with some exceptions for full-time students) in determining whether your income exceeds the program limits. For the Guaranteed program, the income limit is 115% of the area median, adjusted for family size, and for the Direct loan program, it is 50% to 80% of the area median, adjusted for family size. In Stevens County that means you can’t have household income of more than $74,900 for a household of four to qualify for the Guarantee program or $50,300 for the Direct loan program.
If your household income is slightly over the limits, don’t count yourself out yet – USDA has some allowable adjustments that just might bring you back into the limits.
The second qualifying criteria for utilizing the USDA programs is location. Generally speaking they will lend in “rural” areas which encompasses all of Stevens County (but excluding Suncrest), the rural areas of Spokane County (including all of Deer Park and Cheney), and all of Ferry, Pend Oreille, and Lincoln Counties.
There are other limitations I’ll lump into the category of those that don’t meet USDA’s stated goal of helping people who couldn’t otherwise qualify for a loan to purchase a dwelling. If you have enough money in savings to make a 20% down payment, they will probably reject your application and suggest you obtain conventional financing. You cannot own another home, even if you rent it to tenants.
Don’t think this is a program only for inexpensive housing. If you have income approaching the $74,900 limit, you’d be on track to qualify for a home priced over $300,000. That amount covers quite a few very nice homes in Stevens County and rural Spokane County.
Getting pre-approved for the USDA loan is the first step in the process. It is a specialized program and not all lenders will offer it, and each will have their own pre-approval process. With us, it’s a simple process and only costs about $18 for a credit report. A 15 to 20 minute telephone conversation is generally all we need, and our application is available online 24/7.
Michael has 21 years’ experience in the lending industry. In that time he’s directly helped over 1,400 families finance the purchase of a new home or refinance an existing loan. Rebecca has a CPA background in auditing financial institutions which brings an incredible resource to First Priority Financial. They are licensed to help families in the states of WA and CA. If you, or anyone you know, needs help with a home loan call 509-252-9151 or send an email to MMullin@TheLoanConsultant.com.