Having a zero money down loan to finance the purchase of real estate is an ideal option for those needing or wanting to put as little down as possible. The VA mortgage is the perfect answer for those who qualify for this special program. Yet there are times when those eligible don’t have any entitlement remaining because a home originally financed with a VA mortgage is being rented out with the VA loan still on the property. If you find yourself in a similar situation but want a zero down loan, there is another government program you may want to explore. The USDA Rural Development Loan.
The USDA loan requires no money down but without the reduced closing costs associated with a VA home loan. Interest rates on USDA loans are still very competitive but there is only one loan choice available, the 30 year fixed offering.
The USDA loan was originally designed to help those in rural areas find and finance real estate. The property must be located in a specific geographical area and the borrowers cannot make more than 115% of the median income for the area. Not many can qualify for this program due to the geographic restrictions and income limitations but it is indeed an option for those who qualify. If a zero down loan is a requirement for you or someone you know and your entitlement is tied up in another property, the USDA program just might be an option.