BUY A HOME IN 2025 WITH
NO DOWN PAYMENT AND
NO MONEY DUE AT CLOSING
TIRED OF PAYING RENT? BUY A HOME WITHOUT SPENDING A CENT!
Buying a home with zero money down is not just a dream; it’s an achievable reality that many buyers working with The Farley Team at Highlands Elite Real Estate have been able to accomplish in the past 6 months. Most potential home buyers think with todays current market conditions, home prices, and high interest rates that buying a home is just not attainable right now. We are going to go over a loan option in this article that will help you achieve your goal of home ownership while having to bring no money to the closing table. Also we will show you why having a very knowledgeable agent with the expertise to navigate this process on your behalf is critical! There are multiple loan options you can take advantage of to transition from renting to owning. We are going to explain the USDA Loan in this article and how you can utilize this great tool to allow you to start building equity instead of merely paying someone else’s mortgage.
One of the most accessible pathways is through USDA loans. These loans offer 100% financing, meaning you can purchase your dream home without any down payment. The property must be located in an USDA eligigble location, which suprisingly is anything outside of cookeville city limits for the most part. Actually 87.4% of homes in Putnam County are eligible for a USDA home loan. You can check the eligibility of any property you are interested in by typing the address into the link below to ensure it qualifies for USDA by location.
https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAf
[SEE BELOW PICTURE FOR ELIGIBILITY MAP OF COOKEVILLE TN]
*ANY PROPERTY OUTSIDE OF SHADED LIGHT BROWN AREA ON MAP QUALIFIES*
This property for example on Old Salem Dr is still in a very convenient and desirable location yet just outside the brown shaded area therefore it does qualify for 100% financing and zero money down.
Now let’s go over the loan requirements a buyer must check off to qualify for a USDA loan.
Primary Residence: The property must be your primary residence and cannot be a vacation home or investment property.
Credit Score Requirements: A credit score of at least 640 is generally required to qualify for a USDA loan in Tennessee. Some lenders may offer USDA Loans to borrowers with a score as low as 580, but additional requirements will apply. Additionally, a stable employment history is considered, with a preference for at least six months of consistent employment, the longer you’ve been employed the better.
Income Limits: In Putnam County Tennessee, the household income limit for a family of 1-4 is approximately $112,450 per year. For larger families of 5 or more, this limit can go as high as $148,450. These limits are designed to ensure that the benefits of the USDA loan program are accessible to those who need them most. You must consider all persons who will be residing at the home income earnings. (example: wife, spouse, mother-in-law disability income, 19 year old child who is earning income as well) if that number is below $112,450 you will meet the income limit requirements to qualify.
USDA Loan [Debt-to-Income] Ratio - "DTI" Requirements:
to be approved for a USDA Loan DTI no higher than 41% when applying for a USDA Loan. Your DTI is your total recurring monthly debts (student loans, credit card payments, etc.), divided by your monthly pre-tax income, expressed as a percentage. For example: if your rent is $1,000 per month, your car payment is $500 per month, and your monthly credit card payment is $800, your total monthly debt is $2,300. If your gross income is $6,000 per month, then your DTI is roughly 38% (2,300 ÷ 6,000 = 38.3%).
Citizenship: Only applicable to U.S. citizens or permanent residents.
Appraisal: A professional appraisal is necessary.
Mortgage Insurance: USDA Rural Home Loans require mortgage insurance, a small price for the benefit of zero down payment and lower interest rates.
Zero Down Payment: The key advantage—no down payment required!
Now if you like what you're hearing and want to take advantage of the USDA Loan option for purchasing your home. We will list below what you will need to get pre-approved so you can start writing an offer to purchase.
How to Apply for a USDA Loan
To apply for an USDA mortgage you will need to provide the following:
- Proof of income and employment (pay stubs, tax returns, W-2 statements etc.)
- Proof of citizenship and home location
- Documentation of financial assets (bank statements, etc.)
- Residential history (previous two years’ worth)
- Your credit history (it’s also a good idea to check your credit report - not score - here)
- Identity information like your driver’s license, Social Security card, and date of birth in order to apply.
How To Close On Your Home With Zero Money Down
AND Bring No Money Needed At Closing
This is the part where having an agent with knowledge and expertise comes very handy! After you find and view your desired home we start structuring our offer to present to the seller. Another huge benefit of the USDA Loan is the amount of seller paid closing costs the buyer can benefit from. USDA and FHA loans both allow the buyer to get up to 6% of the purchase price towards seller paid closing costs. [Example: $280,000 home = $16,800.00 of seller paid concessions on buyers behalf]
We now write a full list price offer at 280K with the seller paying $16,800 towards your closing costs, title expenses, pre-paids, and a 2/1 rate buydown all paid for by the seller. If the seller decides against paying your closing costs then we can even write the offer $16,800 above the list price if we do not think there will be an issue with the home value on an appraisal. Granted the loan amount will be higher but most buyers we work with care more about does the payment fit into their desired monthly budget. Plus home values are steadily appreciating in the Upper Cumberland area but you can’t make money off appreciation if you’re renting a property.
EXAMPLE:
Lets say your desired monthly payment is $1850.00 per month.
[see below picture for USDA Loan monthly payment breakdown]
The monthly payment on a typical USDA loan comes out to $2,014.95 - Much higher than your desired monthly budget of $1850.00... Here is where we go to work on your behalf to get that payment in your desired range. We are going to get your interest rate bought down for the first 2 years of your loan and the seller will be paying for it with a portion of the $16,800 seller concessions they agreed to when they accepted your offer.
NOW… Utilizing the 2/1 buydown that the seller PAID for your desired monthly payment is achieved!
1st year payment - $1656.18
2nd year payment - $1822.52
After those 2 years your payment would revert back to the original payment of $2,014.95 per month. However, lenders are offering free refinancing within 3-5 years of purchase date. If the rate drops down over the next 24 months you can lock that rate anytime and keep that monthly payment for the duration of your 30 year loan term.
See Below Picture: 2/1 Buydown Explained
If you are considering buying a home or want more details on which loan option would be the best fit your current financial situation please feel free to contact me directly anytime at 931-644-3311 or visit our website at www.soldbyfarley.com and submit your information and I will be in touch with you shortly! Hope this article has given some peace of mind and hope to home buyers in the area who may have previously had the mindset of I can’t afford to buy right now.
Stop paying RENT! Call The Farley Team to purchase your home without a cent!
Brandon Farley
Highlands Elite Real Estate
931-644-3311
brandon@heretn.com
www.soldbyfarley.com
July 31, 2017
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