USDA rural development loans are finally coming back! RD loans are a terrific alternative to FHA and conventional loans if you live just outside the metro area. Due to their popularity, USDA's funding ran out in about April 2010 and Congress just passed the Supplemental Appropriations Act, 2010 and the President signed the bill on July 29, 2010. This will allow funding for the remainder of 2010. USDA has begun the implementation process of the new changes and should be ready for new loans shortly.
The loan is available in areas such as Elko New Market, Lonsdale, Northfield, Princeton, Zimmerman, Belle Plaine and Waconia. If you are looking for a property just outside the metro area, this loan could help you. It is based on a conventional loan but is a zero down loan! There is a guarantee fee that is going to increase to 3.5% of the mortgage amount, but it is financed just like the upfront mortgage insurance premium on a FHA mortgage. There is no monthly mortgage insurance premium! When trying to qualify for a mortgage eliminating the monthly mortgage insurance premium really helps to cut your monthly costs! Interest rates have been very good – roughly about an .125% over a FHA loan.
Because one of the hardest things to save for is your down payment, this program is very popular. VA loans and RD loans are still about the only zero down mortgages left! The seller can pay closing costs on RD loans to also help offset the cost of getting into a home.
If you are looking for a home in these areas, make sure you ask about rural development loans. It can make it much easier for qualifying and then purchasing a new home!