Although available for many years, the USDA or RD loan is a relatively unknown loan program. This zero money down, or 100% financing loan is open to median income households looking to purchase in areas that are considered more rural. Many people however, are misled by the word “rural”, taking it to mean that they need to live on a farm or where your nearest neighbor is miles away. That is pretty far from the reality of USDA eligible areas. In fact most areas outside of major metropolitan areas are eligible, including medium to large towns. It is definitely worth taking a look into this loan to see if where you are looking to purchase is in an eligible area.
The USDA mortgage beats other widely available government loan programs in just about every aspect. Besides the fact that there is no down payment required, the rate of mortgage insurance, or for a USDA loan a guarantee fee, is considerably less than the more widely known FHA home loan. The borrower is also able to receive up to six percent of the purchase price from the seller towards their closing costs. The request for this six percent would be made as part of the offer process on the home. If the seller agrees to this, the six percent should cover all of the closing costs involved with the loan as well as potentially allow them to be reimbursed for the earnest money deposit that is customary with all real estate contracts.