No down payment for eligible rural buyers
USDA Home Loans in Coffee County, TN
Much of Coffee County is rural, and many buyers ask whether a USDA loan could help them buy with no down payment. Here is how the USDA Section 502 Guaranteed Loan Program works, based on USDA Rural Development, and how to check whether it fits your plans.
What the program does
USDA Rural Development guarantees loans that approved private lenders make to low and moderate income households buying a primary home in an eligible rural area. Because USDA guarantees 90 percent of the loan, lenders can offer 100 percent financing, which means no money down for those who qualify. The loans are 30 year fixed rate only, and rates are set by each lender.
Who may qualify
USDA lists these requirements for applicants:
- Household income cannot exceed 115 percent of the area median household income. Income from all adult household members counts.
- You must personally live in the home as your primary residence.
- You must be a U.S. citizen, U.S. non citizen national or qualified alien.
USDA says the program has no set credit score requirement, but you must show willingness and ability to manage debt. Lenders may set their own standards.
Is the home in an eligible area?
Eligibility is decided by address. USDA has an eligibility website where you can enter a specific address or browse the map. Eligibility can differ from one address to the next, so always check the exact address before you fall in love with a home. I check it for buyers as part of every search.
What the loan can be used for
According to USDA, the loan can be used for a new or existing home used as a permanent residence, including detached, attached, condo, modular or manufactured homes, as long as the property does not produce income. It can also cover:
- A site with a new or existing home, with no set acreage limit
- Repairs and rehabilitation tied to the purchase
- Reasonable closing costs
- Some site preparation such as grading, driveways and fences
USDA also lists lenders that offer a single close construction to permanent loan, which can help if you want to build. See my new home building guide.
How to apply
You apply through a USDA approved lender, not through USDA directly. USDA keeps a searchable list of active lenders by state and encourages buyers to compare more than one. The lender handles the application and works with USDA to get the loan guaranteed.
How USDA compares with other options
If you are a veteran, a VA loan may also offer no down payment. If you are a first time buyer, Tennessee's THDA programs may help with down payment assistance; see my first time buyer guide. A lender can compare all of them side by side for you.
Ready to see if USDA fits?
Talk with a USDA approved lender about income and credit, and let me help you find homes in eligible areas around Manchester. Start with the buyer guide, and if you are looking at acreage, read my land buying guide.
Common questions
Is there a down payment on a USDA loan?
USDA Section 502 guaranteed loans offer 100 percent financing, so eligible buyers can purchase with no money down.
How do I know if a home is in a USDA eligible area?
Enter the exact address on the USDA eligibility website. Eligibility depends on the specific location.
What is the income limit for a USDA loan?
Household income cannot exceed 115 percent of the area median household income. A lender can check the current limit for Coffee County.
Matt Sargent is a Tennessee licensed affiliate broker with Keller Williams who helps buyers and sellers in Manchester and Coffee County. Call (615) 497 1658 or send a message.