When it comes to buying a home and getting a mortgage most potential home buyers have at least some familiarity with Fannie Mae and Freddie Mac. The two entities were created by Congress, to expand homeownership and affordable rental housing. They buy and guarantee mortgages through the secondary mortgage market. But according to Joel Kan, associated vice president of economic and industry forecasting for the Mortgage Bankers Association, while Fannie and Freddie are biggest chunk of home loans, “they require 20% down and traditional forms of documentation”. Considering today’s medium home price of ~$250K, that would require a $50K down payment. There is however, a program from the United State Department of Agriculture (USDA) that is also meant for low- to moderate-income borrowers. Most limits are set at 15% above the median income in an area and you will not qualify if you have enough funds available to cover the 20% down required by Fannie or Freddie. The fees set by the USDA are low, a onetime 1% fee of the loan total and 0.35% for private mortgage insurance. These are zero down payment loans and over the past 2 quarters their popularity and the number of people who are interest and have been qualified continues to grow.
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