Understanding a Maryland Zero Down Payment 100% Financing USDA Home Loan.
The USDA 100% Maryland home loan financing is a Government insured home buying program that may require zero down payment when purchasing a home.
This program is available to most U.S. Citizen meeting the credit, income and asset requirements and purchasing a property that meets this loans property guidelines.
A common misconception about the USDA loan is that it has to be used to buy a property that is a farm. The loan is made use of to help promote home ownership in rural areas (basically, outside cities and major suburbs). The USDA determines the rural locations that are considered viable for USDA 100 percent home loan. These areas change with census data.
The borrowers general requirements for the USDA loan state that the borrower(s) must be either U.S. citizens or permanent resident aliens.
In addition : the loan can only be used for the primary residence and it must be owner occupied. This means that a non-occupying co-borrower is not allowed. So, someone cannot co-sign the loan unless they live in the home.
Although this program is run by the USDA and banks follow those guidelines in lending the banks and lenders may add additional guidelines.
In general, the USDA requires that a household income may not exceed 115% of the area's median income.
In Maryland, for example: (most counties) With 1-4 members of the household, the qualify medium income is $93,450. With 5+ members of the household the maximum medium income is $123,350. Please note : this is just an example, these numbers vary across the state for eligible areas/property.
The income requirements may be adjusted based on certain income deductions allowable.
It is possible that a borrower may have assets of 20% of the property purchase price and may not qualify and have to obtain conventional financing
There are recommended debt to income ratios for qualifying.
The standard is 29/41, if you exceed these qualifying ratios then you may present compensating factors. A middle credit score of 640 for each applicant is recommended. There can be compensating factors for lower scores.