100% Financing


This United States Department of Agriculture (USDA) mortgage loan offers buyers 100% financing.

Yes, 100% loans are part of what got us in our current financial mess, but I don?t make the rules and there are many financially solid borrowers who can make use of this loan.  In addition to not needing a down payment, borrowers will not have to pay PMI (despite obviously having less than a 20% down payment). The USDA loans are also your typical 30 year fixed rate loan, so no worries about an ARM or other foreclosure magnet.

Cost of the USDA loan includes a 2% up front loan fee, which can be financed into the loan. But this could make the loan more like a 101% foreclosure magnet loan. (Thank you for pointing that out random italicized voice.)  I?ll prefer to think of the lack of any PMI as making up for this 2% fee. Also, use of the loan is only available on homes in areas defined by the USDA as ?rural?. A lot of Johnson County wouldn?t qualify as ?rural?, however, outlying areas such as Spring Hill, Gardner, Edgerton and De Soto are included. You can go here to get a good view of the southern and western portions of Johnson County Kansas that qualify.

A few other important notes with the USDA Rural Development Loan Program? The USDA is not actually funding the loans, they are simply backing (insuring) the loans for the local investors who make the loans. I?ll save you the math but at least 85% of the loan is insured, which allows the lender to more easily sell the loan off to the secondary market ? this practice is what allows you to access to the best possible interest rates and lowest loan costs.  I?ve heard that borrowers with credit scores below 600 could have trouble qualifying for the loan and would certainly be subjected to a much more grueling loan approval process.