USDA Rural Development Mortgage Guidelines

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VA Loan Guidelines

Zero Down Payment Mortgage

It's true, this government guaranteed mortgage loan requires no down payment. It also allows for maximum seller concessions, and the 3.5% funding fee may also be finance. (max: 103.5% LTV)

The funding fee in 2012 is only 2% so max LTV would be 102%.  Just keep in mind that the Government changes their fee percentages at a drop of the hat.  They usually come out with an AN that announces the change to lenders a few months in advance but that information seldom gets out to the consumer.

This 100%  mortgage is based on the APPRAISED value.  The appraised value thing is a big deal. Other mortgage programs say the loan to value is based on the appraised value or the purchase price, which ever is lower.  The loan being based on the appraised value is a distinct advantage to both the seller and the buyer.

This is a big advantage to the seller because he can negotiate options like paying sellers closing costs or paying for any repairs that are needed.  This will help find qualified buyers that are just short of cash.

It's an advantage to the buyer because the seller is allowed to help with all closing costs and fees.  Those options are called seller concessions.  This loan has no limit to seller concessions except that the lender's underwriter decides on how much is reasonable.

Unlike a  FHA mortgage, there is no "minimum contribution" required of the buyer.

There is no mortgage insurance required because it is replaced by a 3.5% funding fee, which, ... and this is the good thing, it can be financed into the loan.  Thus, the 103.5% LTV. (or what ever the fee happens to be.  It changes.)

Another advantage is that there are no reserves required.  Really!  Reserves are funds that need to be remaining in the buyer account after closing the loan.  This requirement on other loans sometimes loses the transaction if the buyer doesn't have enough money for two to three months of house payments in their savings

This is really a good loan and I don't want you to get the wrong impression.  This is not a sub-prime loan, a place for people with bad credit or people that won't be able to pay the mortgage on a long term basis.

I would also like to opine as to not putting any money down.  If you can afford to put money down on a mortgage it is to your advantage.  The more you put down, the lower your payments.  Remember also that even a few thousand dollars on a mortgage over 30 years adds up to a lot of interest.

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