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How To Find 0% Down Homes (USDA Eligibility Map)

Certified Mortgage Advisor
NMLS 1701021
July 4, 2022

Difficulties with down payment? Let's try USDA 0% down

It can be tough to save for a down payment. And most people don't wanna spend all their savings just on down payment when they also have closing costs, moving expenses, and then any other money you need for things like furnishing or moving into your new home.

So I'm gonna show you how you can get a loan with 0% down, and this isn't a gimmick. This is actually a major type of loan and it's not down payment assistance.

What is USDA?

This is through a loan called USDA and it doesn't involve any meat that I know of, but what it is, it's a loan for what are called rural properties. And before you think it's for farmland, it is not just for farmland. A USDA loan works in certain areas that have a population size below a certain amount. So I wanna show you what a USDA loan looks like when you get 0% down.

USDA Eligibility Map

So you can Google USDA property eligibility to find the eligibility map. Now, something interesting to note about USDA it's one of the four main types of loans. So we have conventional loans, FHA loans, VA loans for veterans, and USDA loans.

How to qualify in USDA

To qualify USDA. We need to make sure that the home is located in a USDA-eligible area. And if you wanna know more about USDA loans, I do have a video that walks through the Loan Requirements for USDA loans.

Map Walkthrough

Now, on the map here, you need to put in an exact address. So instead, what I do is just use this little slider. Now you can see right away, that USDA, actually covers a lot of areas on this map. Anything in tan or orange is ineligible. So most of the US is eligible for USDA.

Extending the commute to save

What I've found is most people can extend their commute by maybe 10 to 30 minutes. And I know 30 minutes gets on the high end to extend the commute, but if you're able to get into a home quicker, and that's your goal, USDA allows you to do. So we're gonna look in Dayton since that's where I am located.

So let's zoom in here really quickly. Let's say that you are wanting to move to Dayton. You wanna live in Dayton. Your job is in Dayton. Right here. Now, obviously everything here in the orange is ineligible for USDA. Now, everything outside here is eligible. We could do 0% down in any single one of these cities.

Outskirts to get 0%

So what a lot of people will do around here is they might look at someplace like Tipp City. So they can't find a home in Dayton for 0% down, but any home up here in Tip City qualifies for 0% down, as long as you qualify for a USDA loan.

Do you need a helpful loan officer or agent?

Now, quick note, before we go into the income limit here and the qualifications for USDA is that if you're looking for a helpful real estate agent or helpful loan officer, you can check out WTHYL - Referral. We've helped thousands of people take the next step into connecting with a real estate agent or connecting with a loan officer to get their preapproval started.

No loan limit for USDA

So in Zillow, I'm gonna look at Dayton and let's pull up a map. So plenty of homes in Dayton here. We wanna look up here in Tipp City. Now, something we need to know first before we look at some of these homes is USDA doesn't have a loan limit. Instead, they have an income limit that changes based on the county that you're in.

Income Eligibility

So we're gonna use this same webpage here for USDA and go to income eligibility. Once you're there, you can go ahead and pick the state and the county. Then you can put in how many people are in the household and they make you put in your income. You can put anything in there and it will show you the maximum for your county then you can click "Finish". So sometimes it will say that we don't meet the income limit. That's okay. I just wanna know what the income limit is.

When will you NOT qualify for a USDA?

So we can see there the maximum adjusted household income is $103,500. So we can't make more than that. If you make more than that, then you won't qualify for the USDA loan. So as long as you make it under that, we can qualify USDA. Now from there, I wanna get a better idea of what home I could afford. So we're gonna keep this in mind, $103,000.

Max Purchase Price Calculator

I'm gonna go to my Max Purchase Price Calculator. What it does is it takes your scenario and it will help you find what estimated maximum purchase prices, along with the monthly payment closing costs, and walk you through all of the numbers there.

How to use my calculator

For example, let's do a 0% down. And let's say that we make 50,000 and let's say we have a co-borrower that makes 50,000 as well. You can also enter any debts that you have here, and then it will show you a suggested maximum purchase price based on different risk levels. So 300,000 as a maximum purchase price is going to be based on a conservative risk estimate. With USDA you might be able to go up to something closer to moderate risk, but conservative, I think is where we're gonna stay right now, at 300,000.

Changing your commute, or a 3% down?

So now let's take a look then let's take a look in Tip City. So these may or may not be the style that you're looking for, but you have quite a few there. So 300,000, this will get you home in Tipp City. We could do 0% down on that. Let's see, we could do all these homes here because they're in Tipp City and are going to qualify for 0% down.

Now, this may not be the ideal situation for you. Having to change your commute. Maybe it's not the city that you wanna live in. But this is kind of the compromise that USDA offers. Basically instead of having to do 3% down on a conventional loan for first-time home buyers, three and a half percent down on an FHA loan you're able to do 0% down on these homes if you change your commute.

You always have an option

Because if we try to check Tipp City directions to Dayton. it's only is 20 minutes. So basically the option that somebody may have in this situation is they put a down payment on a home in Dayton and are closer to where they wanna live. Maybe that's an option that you want, but if you're saying, you know what, I am strapped for cash. I have money, but I need to save that for something like the closing costs or moving costs or renovation costs or whatever. And I wanna save that money. So I don't have to put it on down. You could look at moving outside a little bit further and going with 0% down.

There will always be "other" expenses

Now, it's important that you keep in mind when you do buy a home, no matter if it's a conventional loan or a USDA loan or whatever it is that you still have closing costs with it, you're going to need to pay for an inspection and an appraisal and a title report, county fees, property transfer taxes, escrow accounts, things like that. So keep that in mind. Get a quote from a loan officer when you're ready to take that next step.

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Kyle Andrew Seagraves is Federal Mortgage Loan Originator (NMLS 1701021) licensed in all 50 states with the Dan Frio Team at Allied First Bank (NMLS 203463), an Equal Housing Lender. Separately, Kyle owns Win The House You Love LLC, an education company. Win The House You Love LLC is not a lender, does not issue loan qualifications, and does not extend credit of any kind. This website is only for educational usage. All calculations should be verified independently. This website is not an offer to lend and should not directly be used to make decisions on home offers, purchasing decisions, nor loan selections. Not guaranteed to provide accurate results, imply lending terms, qualification amounts, nor real estate advice. Seek counsel from a licensed real estate agent, loan originator, financial planner, accountant, and/or attorney for real estate, legal, and/or financial advice.

Allied First Bank is not affiliated with the VA, FHA or any other government agency. This site has not been approved by any government agency.
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