With most loan products offering 100% financing disappearing with the downturn in the housing market, many home buyers with little to no cash for a downpayment or closing costs have had a harder time finding loans that they can afford. For many people in this situation, a USDA Rural Development Loan may be the answer for them that will provide a pathway to home ownership.
The loan program is offered through the United States Department of Agriculture and is intended to foster home ownership in rural areas for families with low to moderate incomes. While both location and income limits exist, the areas covered and the maximum incomes allowed may surprise you.
The loans offered are for 100% financing with buyers being able to accept up to 6% from the seller towards closing costs and prepaid items such as taxes and insurance.
In addition, the program does not require the borrower to purchase PMI (private mortgage insurance) further saving on the costs to the buyer.
Many homes for sale are in eligible areas that are in close proximity to major urban metropolitan areas and corridors, the New Orleans area included. For instance, areas in both St. Bernard Parish and Kenner are eligible, as well as most of St. Tammany and surrounding Parishes.
Income limits are set generously at 115% of median income for the area. Income limits for the New Orleans area are for a family size of: (1)=$49,550; (2)=$56,600; (3)=$63,700; (4)=$70,750; (5)=$76,400; (6)=$82,050; (7)=$$87,750; and (8)=$93,400.
More information about rural development loans may be obtained by visiting the USDA website at: http://www.rurdev.usda.gov/
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