FHA (First Time Home Buyer) and USDA (United States Department of Agriculture) Rural Redevelopment are two government programs that encourage home ownership by offering little or no money down financing. In order to qualify for this financing the buyer not only has to qualify, but the home itself also has to meet specific standards and qualifications as outlined by the program - here are a few things to keep in mind:
1. Make the most out of your real estate agent. Before you see any property make sure your agent has talked to the listing agent and let them know you are going with an FHA or USDA loan. The listing agent will be sure to reveal any potential problems with either loan (they don't want to waste their time with a deal that won't go through either).
2. Do some homework yourself. USDA loans cannot be in flood zones, if you need a 0 down loan, you can't get one in a flood zone. Check out floodsmart.gov and see if it's in a flood zone before you look at it.
3. FHA and USDA financed properties need to meet certain standards before your bank will give you a loan for them. Any big problems like a bad foundation, bad plumbing, electrical repairs needed, leaking roofs, even PEELING PAINT can kill your deal.
4. In a normal private sale minor repairs are not a huge obstacle because you can get the seller to take care of the. BUT, if you're looking in the bottom of the market, you are probably finding a lot of REO (bank owned) properties. Banks are usually very unwilling to do repairs or allow anyone else to do the repairs.
