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While FHA has been hogging all the headlines
(no pun intended) another little known loan program has been gaining in popularity.  For over 60 years, the USDA (Unites States Department of Agriculture) has been guaranteeing loans for farms and rural communities.  Recently, however, the definition of rural has expanded to include any communities with a population of 20,000 or less.  This means that even towns next to sprawling urban communities may be eligible.

USDA Mortgages in NJ with no money down financing are still available in many areas.

Many Counties in New Jersey, particularly southern and western Counties, have eligible locations.  Quick list of Counties containing eligible areas; Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, and Warren.

Click here to look at a map of eligible areas in New Jersey for USDA financing.   Be sure to check the site first before looking at properties.

One of the great features of USDA loans is that no down payment is required.  This means that with the government’s current $8,000 tax credit for first-time home buyers, some might actually MAKE money on their purchase.  Note that USDA loans are not limited to first time home buyers, but the borrower may not currently own a home.

So why wouldn’t every small town borrower apply for a USDA loan versus a FHA mortgage?  The qualification standards are stricter – the borrower must have a credit score of 620 or higher, and a debt-to-income ratio of 29/41.  Also, the loans offered are 30-year fixed rate only with the rate tied to Fannie Mae and Freddie Mac.

Some other highlights of the USDA loans are:

• No monthly mortgage insurance premiums
• No bank account or asset reserves required
• Income limits based on number of people in the household
• No pre-payment penalty

To see if a property qualifies, go to http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Click on the following link to view a story about USDA loans which aired on November 20, 2009 on CNBC.

Check it out!

http://www.cnbc.com/id/15840232?video=1337326009&play=1

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I hope you have enjoyed this blog.

Until next time,

Tony
201-943-6800

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