This blog is intended to help asked the most frequently asked questions by prosective first time home buyers regarding 100% financing USDA rural development home loans.
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Do I have to have a down payment? NO! 
USDA home loans:
If you and the property you are purchasing is eligible for USDA financing then no, you do not need a down payment. Typically USDA is in rural areas but not always so it is always good to check and make sure.
Do I qualify? Does this home qualify?
USDA loans require a 2% fee which can be included in the loan.
Assuming you buy a home for 100,000 USDA will require a 2% fee. In this case $2,000 making your total loan amount $102,000.
USDA loans do not require PMI. 
Most loans require that you pay mortgage insurance (PMI) when you have less than a 20% down payment to protect the lender in case of loan default. USDA loans do not require PMI.
You may borrow up to 102% of the property's appraised value.
This is to ensure that the 2% fee charged by USDA can be included, however should the property appraise for more than the purchase price a portion if not most of your closing costs can also be included in the loan amount.
Assuming you buy a home for $100,000 and the appraised value is $105,000. Your total loan amount can be 102% of 105,000 which is $107,100. After paying the USDA fee of 2% this leaves up to $5,100 that can be used to cover your closing costs. If this occurs it is possible to buy the home with only a few hundred dollars out of your pocket.
You may not borrow more than the necessary costs of obtaining the home. Cash out is not allowed.
USDA does not loan in Flood Zones.
USDA requires that the home be modest in size, design and cost.
USDA loans can be difficult to process if the home has an in ground swimming pool. Furthermore the appraiser may not use the pool to derive the home's value.
If you have any other questions about USDA financing click here
Have a question? E-mail me by clicking here or call us 888-206-5781. My extension is 1017
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Nevin,
USDA financing is available in areas that really surprise me to think of them as rural!
Mike - I agree! I have been shocked to find some homes which I thought were in city limits fell under USDA eligibility. Thanks for reading my blog!
Nevin - THANKS for this blog post! Great information for consumers and you know that I'll be reblogging!