Low Interest, No-Money Down Loans

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate

Amid the wreckage of the mortgage business nationwide, there’s still a way to get a low-interest, government-backed home loan without putting up a penny for a down payment.

The catch is the borrower’s new home must be in a rural area or a town of 20,000 or fewer people. But those towns may be in the suburbs. The attractive financing is offered by the U.S. Department of Agriculture’s Rural Development program. The goal remains, but people shut out by the rest of the home-loan industry are finding their way to the USDA’s program as a way to buy a house with nothing down.

Last year, the number of applicants nationwide reached 62,933, nearly double the previous year. While many of the program’s 265,000 borrowers are in the Midwest, it backs $24 billion in home loans across the country as well as in Puerto Rico and U.S.

The program has become so popular that it’s funding of $6.9 billion last year has run out. For now, a congressional resolution is allowing the USDA to make conditional loan.

Whether the financial stimulus package signed last week by President Obama will provide more money for the program remains unclear. Earnings guidelines do apply, but applicants may borrow up to 115 percent of the median household income in the county of their desired home.