Where No Money Down Loans Are Still Available

It's still possible to buy a home with no money down. The U. S. Department of Agriculture offers home loans with zero-down, as long as the home is located in a "rural" area. The USDA's idea of a "rural area" might surprise you.

First time homebuyers, or families with little cash and no home, can buy a house through this program. In many cases, smaller communities just outside of larger cities qualify as rural areas. These bedroom communities offer a relaxed lifestyle, closer community relations, and usually excellent schools.

Maps for Rural Home Areas and Median Income

The USDA provides a link to select rural areas for buying a home with no money down anywhere in the U.S. The areas colored in orange are not applicable, but all other areas are open to purchase. The rural areas are vast and closer to main cities than one might think.

The USDA also provides information on median incomes for each county of the U.S. That way, potential buyers can quickly find out if their income would qualify for no money down loan.

No Money Down Home Loans

There are some limitations to the USDA home loan:

-- You cannot own a home when applying.
-- Income may not exceed 115% of the median in the area.
-- Mortgage payment (including taxes and insurance) may not exceed 29% of household income.
-- Total debt, including the mortgage payment, may not exceed 41% of monthly household income.
-- A 30-year loan is required
-- The lender sets the interest rate

FHA Versus USDA Housing Loans

Federal Housing Administration home loans remain the first choice for would-be homeowners with limited cash. The FHA now requires a down payment of at least 3.5%. FHA requires borrowers to carry mortgage insurance and they limit the seller paying toward closing costs. USDA loans have none of these restrictions.

USDA home purchases with no money down are worth checking out, regardless of life situations.

Owning your own home might be less expensive than condominium or apartment leases. A little research could save a lot of money and give the satisfaction of home ownership.

More by this contributor:
Tips for Dealing with the IRS When Self Employed
Finding Tax Free Preparation for the Elderly and Military
Money Management Tips from My Depression Era Parents