For many potential home buyers, putting together enough money for the down payment on a house is the biggest financial roadblock between them and homeownership. Most traditional lenders and banks require a down payment equal to 20 percent of a home's asking price, while even mortgage loans insured by the Federal Housing Administration require a down payment of 3 1/2 percent of a home's sales price. The single-family home loans from the U.S. Department of Agriculture's Rural Development agency require no down payment at all. To qualify for one, though, you'll have to meet certain requirements.
Instructions
1. Make copies of the financial paperwork that your lender will use to determine if your gross monthly income is high enough to support your new mortgage loan payments. Most lenders want your monthly debt obligations, including your new mortgage payments, to total no more than 36 percent of your gross monthly income. The paperwork you need to copy includes your two most recent federal income tax returns, two most recent paychecks, credit-card statements, other loan statements and checking and savings account statements.
2. Contact a mortgage lender or bank and explain that you'd like to apply for a single-family home loan backed by the USDA Rural Development agency.
3. Make sure that you meet the eligibility requirements for a Rural Development home loan. To qualify for one of these loans, you must occupy your home as a primary residence, meet household income requirements and purchase a property in a Rural Development area. To see if you meet the household income requirements, log on to the Rural Development website's "Income Eligibility" page. To determine if the home you want to purchase is in a Rural Development area, log on to the Rural Development website's "Property Eligibility" page.
4. Send your lender the copies you made in Step 1 if you meet the income and location requirements of the Rural Development single-family loan program.
5. Allow your lender to check your credit score. This three-digit figure tells lenders and banks how responsible a borrower you've been in the past. If you've missed payments, defaulted on loans or declared personal bankruptcy in the last 10 years, your credit score will fall. Lenders pass out the lowest interest rates to borrowers with credit scores of 740 or higher. Those with scores under 620 might not even qualify for a mortgage loan.
6. Agree on a closing date for your loan if you meet your lender's and the Rural Development agency's requirements. At the closing, you will sign the papers necessary to make your mortgage loan official. You will also pay any origination fees that are required.
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