USDA mortgages are available with zero down payment to borrowers under certain income limits who want to buy in a designated rural area. USDA provides maps that illustrate whether or not a geographical area is allowed to have this program. 

The maps for USDA were set to be revised late last month with revisions taking place at the end of this month have been postponed by Congress. USDA mortgages are proceeding “business as usual” until they hear otherwise from “the hill”.

The orange areas of this map shows areas that are currently not eligible for USDA zero down payment financing.

Congress has introduced bills that would change how a rural area is defined, including increasing the population to 35,000 based on the 2010 Census which would allow more homes to be eligible for zero down USDA mortgages.

USDA loans offer very competitive rates. Just yesterday on Twitter, I shared a quote based on a USDA loan in the Maltby area in the mid 3’s for a 30 year fixed with zero down payment for a $500,000 sales price based on a family of 5. 

If you would like a mortgage rate quote for a zero down USDA mortgage on a home located in Washington, click here.

In addition to the property being in a designated rural area, to qualify for the USDA zero down mortgage program, your household income cannot exceed the current income limits. Current household income limits for properties in King and Snohomish counties are $93,450 for a family up to 4 and $123,350 for a family of 5 to 8 members living in the home.

If you’re interested in a USDA zero down mortgage in Duvall, North Bend, Port Townsend or anywhere in Washington state, I’m happy to help you.

We received this notice late last week from USDA:

FY 2012 refinance funds are exhausted.

At this time, we are unable to process any GRH Refinance transactions. The applications currently awaiting review by Rural Development will be returned to the lender without action.
Refinance funding will be restored in October. The new fee structure will be 2% upfront and 0.4% annually. Because of the new fee structure, any refinance applications currently with RD will have to be re-underwritten, and resubmitted for review. Lenders may submit applications for refinance (at the new rate) at any time, however, RD will not review them until funding is restored.

Please note that funding for new applications is still available and will likely remain so through the fiscal year.

USDA offers zero down financing for residential purchases in designated rural areas to families under certain income levels.  

NOTE: INCOME LIMITS HAVE BEEN UPDATED SINCE THIS POST WAS PUBLISHED.

USDA is a government backed program that allows zero down payment on homes that are in a designated rural community for families earning less than a certain income. A majority of Washington State single family residences (homes and condos) qualify…of course if you live in metropolitan areas like Seattle or Bellevue, odds are your home will not.   To qualify, families must be without “adequate housing” (may not own a home or adequate home), must have reasonable credit history and be able to afford the mortgage (29/41 is the debt to income ratio guidelines).  

Income limits vary by county and the entire household income is considered (not just the primary borrowers or those borrowers on the mortgage) for determining if the income meets the guidelines.  This is separate from income considered for “debt-to-income” ratios.  USDA loans allow incomes up to 115% of the median income for the area.  Income limits vary on household size from 1-4 person or 5-8 person.

As of the publishing of this article, in Washington, the income limits by county are:

• King and Snohomish Counties: 1-4 Person $92,600 | 5-8 Person $122,250
• Island County: 1-4 Person $89,550 | 5-8 Person $118,200
• Kitsap County:  1-4 Person $85,700 | 5-8 Person $113,100
• Thurston County: 1-4 Person $85,100 | 5-8 Person $112,350
• Clark County: 1-4 Person $82,800 | 5-8 Person $109,300
• Pierce County:  1-4 Person $81,450 | 5-8 Person $107,500
• San Juan County: 1-4 Person $78,050 | 5-8 Person $103,050
• Whatcom County: 1-4 Person $76,850 | 5-8 Person $101,450
• Benton and Franklin Counties: 1-4 Person $75,750 | 5-8 Person $100,000
• All other Washington counties:  1-4 Person $74,050 | 5-8 Person $98,650

You can check current USDA income limits by visiting the USDA site (clicking here)…be sure to click the “guaranteed” option.   Income limits can and do change. You can also use USDA’s income eligibility calculator which will factor in deductions to income, select the “guaranteed” results (not “direct”).

Income used to determine if a family is under the household income limits includes all those (18 years and older) who will be living in the home regardless of whether or not they’re on the mortgage.  Incomes of children over 18 who working AND who are full time students are not factored.

Once you’ve determined that you meet the household income limits, the next step is to see to see what communities in your area are eligible for USDA financing. You don’t have to go too far from Seattle or Bellevue to find homes that do qualify for this type of mortgage.   Using the USDA site, under “Property Eligibility” click “Single Family Dwelling”.  From there you can either enter a specific address or click on the map to narrow down your search. 

Sellers and real estate agents who are working in neighborhoods that qualify should be sure to include this program as an option they’ll consider for financing on their offers. 

I’m pleased to offer USDA financing as an option for borrowers who meet the criteria since there is no private mortgage insurance and the program is a 30 year fixed rate. If you have any questions regarding USDA or other mortgage programs for financing homes located anywhere in Washington State, please contact me, I’m happy to help!