Intro:
USDA is the true zero-down program, and it’s the first thing I check for buyers looking outside the metro core: Battle Ground, Ridgefield, La Center, Woodland, parts of Cowlitz and Skamania counties, and a lot of Columbia and Yamhill counties on the Oregon side. Eligibility depends on the specific property’s address, so send it to me and I’ll check it in a minute.
The income limit is the part that surprises people
USDA has a household income limit, and it counts everyone 18 and over living in the home, even if they’re not on the loan. That’s the part that surprises people. It’s also separate from the income we use to qualify you, and things like childcare and dependents can bring the number down. I’ll run it for you once I have everyone’s income.
The guarantee fee
This is USDA’s version of mortgage insurance, and it’s lower than FHA. There’s a 1% upfront fee that gets added to the loan, plus an annual fee of 0.35% that’s built into your monthly payment. Some ball park numbers on a $400,000 purchase with nothing down:
- Upfront fee: $4,000 (400,000 x 1%), making the loan $404,000
- Monthly fee: about $118 (404,000 x 0.35% / 12)
Zero down still isn’t zero cash
Even with no down payment, you’ll need funds for closing costs and the initial collection for taxes and insurance. Seller concessions can cover a good part of that, and we’ll want to decide on those before you make an offer.
Manufactured homes
You can do USDA, FHA, and conventional loans on a manufactured home provided it’s on a permanent foundation and isn’t very old. Anything from before the mid-1970s is hard to finance. Expect a slight hit to the interest rate compared with a stick-built home, and know that manufactured homes don’t typically appreciate as well. Brand new manufactured homes tend to have better financing terms.