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- Ultimate Guide to USDA Loan Requirements for a 0% Down Home Loan
Ultimate Guide to USDA Loan Requirements for a 0% Down Home Loan
Learn everything you need to know about USDA loans, a little-known option that allows you to purchase a home with 0% down payment in most areas. Discover how this program differs from traditional loans and why it is accessible to most buyers. Find out about its low rates and mortgage insurance benefits.
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Video Transcript
USDA is a loan that most people don't know about.
It allows you to buy a home with 0% down in most areas.
A lot of people don't know about them.
They think that they're for farms or they're inaccessible,
but in reality, it's available for most people
in most areas.
So some quick highlights with this program,
then I'm gonna show you everything you need to know
about this program.
You're gonna be more educated than most loan officers
are about this program.
So first, the biggest draw to USDA is it's 0% down.
It's not a down payment assistance program. It's not a grant that you have to pay back.
It's truly you don't have any down payment on this loan.
Okay, it also comes with a low rate and low mortgage insurance compared to conventional
loans, which I'm going to show you here in an upcoming slide as well.
Now there are two different types of USDA loans.
There's one called a USDA direct and one called USDA guarantee.
So USDA direct is only offered directly through USDA, through USDA's website,
and it's for low income individuals or households.
households. And so that is going to be directly through USDA. Now what most lenders have is
what's called a USDA guaranteed loan. And that's a loan that our company does as well.
You can apply for a home loan at winthouseyoulove.com if you're interested in seeing how we can
help you with that. But what we're going to be talking about in this video is the USDA
guaranteed loan program. Now, USDA loans are for what are called rural areas, and it doesn't
mean there has to be a tractor every, you know, a half mile. What a rural area means
is it's a population size and I'm going to show you a tool you can use to see what areas
qualify for USDA.
Most people can get a USDA loan if they extend their commute just a little bit.
So USDA is not going to work if you're looking at buying in a really big downtown area.
What you're going to have to do is extend your commute to a less populated area to be
able to purchase with USDA.
Also you don't have to be a first time home buyer which is a nice plus.
Maybe you already bought a home and you're looking, you know, you want to buy another house, but you don't want to buy a new house.
don't want to take all your equity and put it as a down payment, you can use a USDA loan.
Now this is a government backed loan and it's offered by many lenders.
So all that it means by government backed is that the government is the one who makes
the rules about this.
In this case, USDA is the one who makes the rule about the USDA loan.
And because it's government backed, it usually offers pretty great interest rates because
it is insured by the government, but it can come with some more strict requirements, especially
for the appraisal that we'll talk about. USDA is just the United States Department of Agriculture,
which can be a little bit confusing. Why are they giving out loans? And it really is to support
population growth in these more rural areas. Okay. And the approval for these loans are based
on what's called a GUS. It's the Guaranteed Underwriting System. Now, when you get a mortgage,
almost every loan is going to be put through an automated underwriting system,
Usually, just abbreviated AUS.
With USDA, it's through GUS, the Guaranteed Underwriting System.
All it is is it's a software.
It looks at your loan application and basically says, is your loan approved or not?
