I recently had an interesting interaction with a potential buyer client. She was interested in using one of the USDA Rural Housing Loans for her home purchase because they still offer 100% financing (zero down payment), but she was interested in a home that was listed in Hermitage. Unfortunately, you can’t use this loan program in that area.
Above you can see the areas where USDA is an option. Recently the entirety of Wilson County was opened up as an option.
But I wanted to let you know that rural loans aren’t the only game in town in you are looking for low downpayment options.
Post-recession many lenders have opened up conventional loans that only require 3% down. If you have good credit, and verifiable steady income, you should be able to qualify. Mortgage insurance will be required which is an additional cost.
You may also want to look are the regular old FHA 203b loan. FHA requires 3.5% down which isn’t that much in the scheme of things. The funds can even be from your family as long as it’s documented. The funds can not come from the seller.
Another option is going to be a VA loan. These loans are only available to those with VA eligibility. If you’ve been in the military at any point in the past, you should qualify. VA loans do come with a hefty closing cost funding fee, but this cost can be rolled on top of your loan or possibly paid for by the seller if your Realtor helps you negotiate for it.
THDA is another great option. THDA offers a couple of loan products. You can get 4% in down-payment and closing cost assistance in exchange for a slightly elevated interest rate. Or you can get 2% assistance with a lower rate. THDA isn’t offered by all lenders so be sure to ask yours if this is a program they have available.
The Housing of Urban Development offers also offers the HUD $100-down program, but it’s only available on HUD-owned foreclosure listings (ask me for a list!). PS. I’m a HUD-approved agent.
Bottom line: you may have more choices than you think.
Ask your lender to run different scenarios to find your purchasing sweet spot. With today’s extra low interest rates, I’ve been you will find that you can qualify to buy more house than you thought you could.
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