Remember the days when zero down payment loans were everywhere and every lender across the country was hawking them from their websites and in late-night infomercials? Anybody with a pulse could buy a home with very little money out of pocket.
We all know how that turned out and, in the end lenders put the brakes on their generosity.
Zero-down loans still exist, however, and the most popular among them is the VA and the USDA loans and Utah we have what is called Utah Housing loans. Only military veterans and current members and some spouses qualify for the former, so let’s take a look at the USDA and Utah Housing a loan you might just qualify for.
This is basically an FHA loan that is backed by a second mortgage that will fund you up to 6% more for your down payment and closing costs. There are other types of Loans that Utah housing finances for home buyers but lets focus on the zero down payment loan.
The interest rates for this loan are determined by Utah housing so you will be guaranteed the same rate no matter where you go. The second mortgage is usually 2% higher than the first mortgage. Best thing is the 2nd is financed over 30 years so the payment is very small.
You usually must have at least a 660 Credit score.
The home must be owner occupied, you must not rent any of the home out during your loan terms.
No cabins, recreational homes, or homes considered a rental unit having two utility meters.
There are income limits depending on your family size. Click here for information on where you might stand.
For more information about this product or others offered by Utah housing click here
What the USDA Offers
Depending on income, a borrower can qualify for a loan guarantee made to a lender (much like the FHA-backed loan), or a direct loan made by the USDA.
Both of the programs have income limitations and the home must be located in a rural area, which the USDA defines as “open country or rural towns” with a population of no more than 20,000. You cannot own another home if it is within 50 miles of the home you wish to purchase.
Here are the basic qualification requirements for the USDA Direct Loan:
- The borrower must meet income criteria based on where the home is located. Click here to find out
- The borrower must be with adequate income must be able to afford house payments, including insurance and taxes.
- Buyers must occupy the residence as their primary residence.
- Applicants must have a “reasonable” credit history. Currently a 640 credit score.
- Applicants must be U.S. citizens or a legally admitted immigrant.
Just as the borrower must pass muster for the loan, so must the home that he or she wishes to purchase. The house must be modest for the area in size, design and price (swimming pools are prohibited). There are additional requirements that your lender can fill you in on.
The qualification guidelines for the Guaranteed Loan are similar to the Direct Loan except that your income may be a bit higher and you must use a USDA-approved lender.
While there are several low-down payment loan programs on the market, the USDA’s zero down requirement is a boon for homebuyers with decent credit, low income and no cash reserves for a down payment.
For more information on Utahs USDA loan programs and other updated items visit https://www.rd.usda.gov/ut
Call us today if you have questions about these products or want to buy a home and need some more directions on how it can be possible for you.
801-682-9486 or visit is at www.WasatchFrontAgent.com