27 Years of Professional Creative Real Estate Financing in Florida and Michigan

Want to Know More About 0% Down Loans?

Pamela J. Gordon

941.758.0600 office   248.770.7066 mobile/text

USDA Loans

0% Down Payment, Low Interest Rate, Residential Mortgages without PMI

The USDA Guaranteed Rural Home Loan provides low and moderate income rural residents with better access to affordable housing finance options with little or no down payment or out-of-pocket costs. The borrower’s adjusted gross income may not exceed 115% of the HUD median income limit and the property must be$80,000 a year. However, there are many areas that you may not consider rural, but are eligible for these loans. You can check for a particular area at:

There are parameters to be eligible for these loans:

Borrower must be unable to obtain the necessary conventional credit without the RD Guarantee Conventional credit is referred to loans not guaranteed or insured by the Federal Housing Administration (FHA), the Veterans Administration (VA), or the Rural Housing Service (RHS).

         A Conventional loan is defined by the USDA as one where:

  • ​the borrower was able to make a 20 percent down payment; and
  • the borrower was able to pay all closing costs out of pocket; and
  • the borrower’s total debt ratio was 36 percent or less; and
  • the borrower’s debt ratio for principal, interest, taxes and insurance (PITI) was 28 percent or less; and
  • the borrower had a good credit history consisting of at least two credit bureau trade lines open and paid as agreed for at least a 24- month period, to include that:
  1.      the borrower was not currently 30 days or more past due on any trade line; and
  2.      the borrower had not been 60 days or more past due on any trade line over the past 24 month period; and
  3.      the borrower did not have a foreclosure or bankruptcy in their credit history over the past 36-month period; and

    4.      the conventional mortgage loan term was for a 30-year fixed rate loan term without a condition to obtain private mortgage insurance (PMI).


Note: Liquid assets for conventional credit down payment purposes typically consisted of cash or cash equivalents. Cash or cash equivalents included funds in the borrower’s checking or savings accounts, or investments in stocks, bonds, mutual funds, certificates of deposit, and money market funds, unless they were encumbered (pledged as collateral) or otherwise inaccessible without substantial penalty. Cash equivalents typically did not include

funds in Individual Retirement Accounts, 401(k) accounts, Keogh accounts, or other retirement accounts that were restricted and may not be accessed without incurring substantial monetary penalties.

  • Borrower’s adjusted gross income (AGI) cannot exceed 115% of the HUD Median Income Limit –Refer to the Income Section below.

  • Individuals with a valid social security number (Tax ID number is not acceptable).
  • Inter vivos revocable trusts• Illinois land trusts
  • Permanent Resident Aliens:                                                                                                                                                                       
  • As long as the borrower holds a “Green Card” (an Alien Registration Receipt Card, INS FormI-551), the loan is eligible under the same               guidelines/terms as a loan made to a U.S. citizen.A copy of the front and back of the Green Card must be included in the file. An                     approved Green card application will not be acceptable.
  • Non-Permanent Resident Aliens:                                                                                                                                                                 
  • All Non-Permanent Resident Aliens must provide acceptable evidence of their eligible immigration status.                                                       All Non-Permanent Resident Aliens must have a minimum 2 year history of residency, credit and employment and currently reside and work         in the U.S. Income should be expected to continue for at least 3 years.                                                                                                    
  • If tax returns are required, they must be U.S. federal returns.                                                                                                              
  • Funds for closing must be in U.S. bank accounts. If funds were transferred from a foreigndepository, the borrower must provide evidence           that they owned the funds prior to the transfer.
  • Ineligible:                                                                                                                                                                                                Foreign nationals                                                                                                                                                                              
  • Borrowers with diplomatic immunity​​
  • • Borrowers without a Social Security number (Tax ID number is not acceptable)
  • • Land Trust, except Illinois
    • More than four (4) borrowers per transaction
    • Non-occupant co-borrowers
    ​• Any individual listed on HUD’s Limited Denial of Participation (LDP) list at or the General Services Administration’s(GSA) Excluded Party List

    ​There is a transaction fee, like a FHA Mortgage Insurance Premium, that is charged at closing of 2% of the mortgage amount. The yearly fee, however, is very low. Itis only .3% of the mortgage amount annually. That is only $25 a month per$100,000 of mortgage amount.The mortgage amount is allowed up to 100% of the current appraised value, so if the property appraises higher than the purchase price all of the closing costs and funds for escrow accounts can be financed. The mortgage amount cannot exceed the appraised value except to include the 2% transaction fee. We often can include the closing costs and escrow funds into the interest rate so that you can purchase a home with almost no out of pocket expenses. The maximum loan amount is $417,000 so it allows for many types of homes.