should i do a 0% down USDA loan?

Question

so i am looking into a property which is for sale on a USDA loan with 0% down.

they are asking 65k and are willing to pay closing costs.

they refuse to rent or land contract.

USDA loans are one of the few things i haven't learned much about in my real estate journey.

looking for some advice, min qualifications, restrictions on use/exits, etc...

should i jump on this? or let it pass?

what should i beware of?

i welcome multiple angles on this. so please weigh in, even if already has some answers.

thanks!

Charlie MacPherson · Answer

@Lawson Ott USDA is a great loan program but is only available in certain areas with lower population density.

Minimum credit score of 620, and owrner occupied for SFR.  There are also income limits.

There is a non-owner occupied for MFR as well.

Details are here: https://eligibility.sc.egov.usda.gov/eligibility/w...

Lawson Ott · Answer

well, this takes the wind out of the sails:

• Not be designed for income producing activities

thanks for the link

Lawson Ott · Answer

@Ben Wilkins

well, that's what i'm asking about.

on the surface, it's good. but if there's any USDA gotchas i need to look out for, such as special insurance costs, not being able to rent it out, etc, it may change the outcome.

Ben Wilkins · Answer

@Lawson Ott - is $65k a good price for the area? What are the comps?

I can't specifically speak toward USDA loans, but I can at least suggest that you look and see if the property is a deal regardless of which type of financing that you use

If the property isn't priced at a good deal, then zero percent down probably won't make it any better of an investment.

should i do a 0% down USDA loan?

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