The Cure for the I-Ain't-Got-No-Money Blues - Part II

In Part I, I talked about what it takes to get a THDA loan, which is one of only a few options for low- or no-down payment mortgages. Another of these scarce-as-hen's-teeth programs is known as USDA or Rural Development. There are two types of programs, direct lending & guaranteed lending.

Property Limitations

If you're paying attention, you might guess correctly that this loan is designed to be used to purchase more rural properties. The more populated areas of Hamilton County just aren't going to qualify. That doesn't mean you are limited to farm land or the boondocks, though. This map shows you where you can find a house that will work: That line you see that sort of cuts through the Middle Valley dot is Thrasher Pike. Most properties north of Thrasher will qualify, pretty much everything south of there won't. There's also a little spot in the eastern part of Hamilton County where you can look at as well over there in Apison & Collegedale. If you are map-reading challenged, click here and put in the actual address of the property. It can usually tell you for sure. Some newer subdivisions won't be listed. If you still can't tell, call or email me and I'll figure it out for you.

Income Limitations

In addition to the location of the property, the potential buyer has some limitations as well, namely, income. Income limitations will vary depending on household size and whether you are going the direct or guaranteed route. Just to give you some idea, the limits for a two person household in Hamilton County are $35,900 for direct, and $73,600 for guaranteed.

Cons

Using a USDA loan is definitely going to limit the number of available properties so if you are looking in a really tight price range, this may not be the loan for you. In addition, there is a 2% upfront fee that helps keep the program going. Kinda steep but less than the upfront PMI that an FHA loan is going to require. It might take an extra few days to get your loan approval because there's a couple of extra steps vs. a conventional or FHA loan. One big con that is a very real concern right now: the program is running out of money and may be out of business for a little while until Congress appropriates more funds. Call me for the latest news on this.

Pros

One hundred percent financing is a huge plus for this loan. You also have the option of financing your closing costs (including that 2% fee) into your mortgage. The other big upside? NO mortgage insurance is required, even if you're borrowing 100%. That's can make a pretty big difference in your monthly payment. Mortgage insurance doesn't benefit anyone but the lender so not having to pay it is a great thing for the borrower. So to recap - 100% financing, limited locations, limited income, pretty much nothing out of pocket, but they may be running out of money. Hey, you win some, you lose some.

Originally posted at JuliaOdom.com