Did you know that the USDA does more than provide funding for beef advertisements?

It does. It turns out the USDA does a lot more. In fact, the USDA is in the real estate business. The United States Department of Agriculture has a Rural Housing Program, and has designated areas in Utah County to be eligible for this program. Their purpose, in part, is to spur the economy and development of rural areas. To do this, they offer a housing program, or more specifically, federally backed loans, which are tough to beat. This is no ordinary FHA loan. Consider the details below.

While an FHA loan requires at least a 3% down payment, because a USDA gauranteed housing loan offers 102% LTV, (loan to value) a down payment is not required. Furthermore, the additional 2% should cover most, if not all of your out-of-pocket expenses normally incurred through origination fees, appraisal costs, etc. Additional closing costs can come from any source, including gifts, and are not limited to any amount.

And that’s not all – most traditional loans require 3 to 6 months reserves in your checking or savings account. 6 months worth of payments on your new mortgage can be hard to save. Under the USDA Rural Housing Program, no bank reserves are required. The program offers competitive 30 year rates, which are at historical lows – 4.98% as of this writing. Moreover, the program requires no PMI, or private mortgage insurance, which helps decrease your monthly payment significantly.

So, here is a loan backed by the USDA, or Federal Government, that requires no down payment, no out-of-pocket cash, and is not dependent upon bank reserves. There’s more.

Unlike Utah’s Home Run Program, which allocates funds toward the purchase of newly constructed homes, the USDA program can be used toward existing homes and newly constructed homes. In fact, repairs and improvements can be included in the loan or purchase price. Furthermore, unlike the $8,000 tax credit incentive from the Federal Government, this program is not limited to first-time home buyers. There are no size restrictions and no price restrictions (of course, your income will dictate how much house you can buy.)

So what’s the catch? You must be credit worthy. And the home you purchase must be in a USDA designated area, which are “rural” areas. To determine which areas are eligible for this program click here.

Does that mean I’ll be living on a farm? Maybe, maybe not. The USDA has designated areas in Utah County west of Utah Lake and west of the Jordan River for this program. That means some of Lehi, all of Saratoga Springs, and all of Eagle Mountain are included. I know what you’re thinking: Saratogo Springs??? Eagle Mountain??? Though Saratoga Springs and Eagle Mountain still dedicate a great portion of land to farming, they can hardly be called farming communities. And while both cities seem pretty far from Salt Lake or Provo, most residents of these cities enjoy the peace and quiet of a small, mostly young community, while living only a short distance from several larger cities. And, the commute to Salt Lake from Saratoga Springs and Eagle Mountain is about to get better through UDOT’s widening of Redwood Road.

If you want to learn more about a USDA loan, any competent mortgage broker should be able to help you. I recommend Jordan Ison, of Redfleet Financial. You can contact him at 801-414-9056 or by email at jordan@westridgefinancial.com. And, if you end up looking for a property to finance through this program, I recommend Jake Breen and Spencer Jenke, both of whom you can check out here. Saratoga Springs, or Eagle Mountain may not be for everyone, but if you are looking for a great incentive to buy your first home, or even to upgrade to a new or different home, you should look into it.