This is the first I heard of USDA 100% Mortgage Financing with a score of 580 or better, no PMI and 41% DTI. I saw this somewhere else, and then today a potential tenant/buyer mentioned it on the phone.

USDA site: Click Here

"USDA loans (US Department of Agriculture) aka Section 502 loans are an excellent mortgage vehicle for those who do not have money to put down but have decent credit ratings. Typically a credit score over 600 will get the loan done. A score between 580-600 will come under much heavier scrutiny but will not rule out the borrower.

You heard that correctly...with a USDA loan you can do 100% financing!

These loans are typically used to help low to moderate income households purchase homes in rural areas. These loan products are backed by the Federal government.

In order to qualify for a USDA mortgage loan you can only have an income up to 115% of the median income for the area you are interested in buying a property.

The guidelines also include repayment viability based on P.I.T.I (Principle, Interest, Taxes, and Insurance) divided by gross monthly income being less than 29%. Total debt divided by gross monthly income must also be equal to or less than 41%.

One of the other great benefits of the USDA loan is that there is no mortgage insurance required. This can save the borrower quite a bit of money!

In my experience, unless you are in a heavily populated city the definition of rural is pretty loose. Many areas that you may not consider to be rural in your mind may qualify for a USDA loan. Areas that have a population under 20,000 will probably be ok in most circumstances.

It would be a good idea to check with a qualified mortgage professional to see if a USDA loan could work for you. Not all lenders work with these type of loan products as they are more paperwork intense.

For additional information on USDA loans I would suggest visiting the USDA loan website."

Yeah, these loans are excellent for home buyers.

But, if you're on the other end, as an investor trying to structure a deal
with an owner that has one of these loans, they can be very difficult to do
anything with. Usually, a cash sale is their only option out. And that usually
incurs a penalty should the owner sell within a few years of acquiring the loan.

Good find though!

Maybe an option for those "Rural" tenant/buyers looking for financing.

I've heard of these but never really looked into them because south FL is anything but rural. That said, I did have an opposum on my patio the other night. Can I qualify?

Steve,

Everything you are reading about USDA financing is true. We just got one of these loans here in Pfafftown. Pfafftown is anything but rural right now. But was very rural at one time. Our payment is going to be cheaper with this USDA financing than with FHA & 3.5 % down because USDA has no PMI.

You can contact Bill Reynolds at Fairway Mortgage in Winston Salem. He is very familiar with this product. His phone # is 336-14-1556 x 1.

Tell him Mike Mitchell sent you.

Thanks.

Rural.

My entire state qualifies.

What, you have opposums too?