Low and No Down Payment Loans Still Exist: FHA and USDA Rural Housing Most Popular

If you have worked at the same place for the past two years, paid your rent and other bills on time and have an average credit rating, you can become a homeowner. Having a down payment equal to 10% of the sales price is just not necessary in every case.


The true, no money down mortgage that is currently available with great interest rates is the home loan program offered by the USDA (United States Department of Agriculture). The program is often referred to as the Rural Home Loan, but the name should not stop you from investigating this type of loan. Every state has areas that are eligible for this type of loan. In fact, most large cities have areas just beyond the city limits that are eligible for a USDA loan.

USDA will allow borrowers to receive a loan up to 100% of the appraised value of the property. It is also possible to have the sellers pay the closing costs from the proceeds of the loan.


The guidelines for an FHA loan state that buyers need to pay a minimum of 3.5% of the purchase price as a down payment. For a loan of $175,000 that would mean the buyer needs to pay $6,125. HOWEVER, the guidelines also state that part or all of that money can come from a relative in the form of a gift. Parents or grandparents who are hoping to help their relatives start a new life are often happy to help by supplying funds for a down payment.

Both of these loans approve borrowers who have less than perfect credit scores. Sometimes it is even possible to get an approval from FHA with a lower credit score if there are extenuating circumstances and the borrower can prove they have reestablished their credit and spending habits.

For additional information see our USDA Rural Housing or our FHA Loan page. To see if you qualify, contact us below or apply online!

Filed under: Illinois Blog, No Money Down Loans

Luke Skar

Luke Skar is the web developer and content strategist for Inlanta Mortgage of Madison, serving WI, MN, IL, & FL. Guided by his 12-plus years of various mortgage marketing experience, Luke provides top-quality SEO services, effective social media management, and web development and maintenance. Luke’s career in the mortgage industry began back in 2001, as a loan processor. After becoming a loan officer for a number of years, Luke is now the sole owner/operator of madisonmortgageguys.com. To ensure that all the information he posts is fresh, accurate, and up-to-date, Luke relies on the knowledge which his years of dedication to keeping up with the constant change that the mortgage industry provides.


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