USDA no-down-payment financing for people looking to buy homes in the Birmingham area will continue to be available after September 30th, despite earlier reports from the Agency that the popular loan program would wind down permanently at the end of the month.
How long will USDA financing remain in effect? Not even the government—which administers the program—is saying.
The loan program will “continue for some period,” according to Rich Davis, acting Administrator for USDA’s Rural Housing Service.
Many Buyers were concerned that loss of the program would reduce their chances of being able to buy a home in places in Shelby Co. including Chelsea and Calera, areas the government considers rural, and therefore eligible for USDA financing.
In the meantime, a new 100% conventional loan program has been introduced, and which would be a back-up for some Buyers who had wanted to purchase with USDA financing.
If you’re thinking of buying a home, figuring out what loan is best for your particular situation—whether it’s USDA or something else—can get confusing.
Your best bet is to contact a Lender knowledgeable in the many loan programs that are available in the Birmingham and Shelby Co. area before you buy.
If you’re thinking of buying a home in several areas near Birmingham using 100% loan financing through the U.S. Department of Agriculture, you’ll have to go a different route.
Effective October 1st, homes in Chelsea, Calera, Moody and Pleasant Grove—areas that have been eligible for USDA’s no-down-payment funding—will no longer qualify.
Current loans that are already in USDA’s processing system as of October 1st will be honored.
The removal of these areas comes as a result of a decision that these communities are no longer considered rural.
USDA’s loan program has been very popular…Colleen and I have helped many first time Buyers over the years with purchasing a home using this financing.
This does not necessarily mean that you’re out of options if you’re trying to get a 100% financed loan for a home in these areas.
A new 100% conventional loan program has just been announced that may be a suitable alternative.
Offered by several area Lenders, the new loan program is currently available at a fixed rate of 4.75% to Buyers who qualify, and has reduced mortgage insurance. And, unlike USDA loans, this new loan is not restricted by area.
Here are a few Lenders in the area you can contact for more information:
First Federal Mortgage
Home Mortgage of America, Inc.
With two days left to spare, the government has decided not to allow a change to take effect that would have meant the removal of Calera as one of the communities eligible for no-down-payment home mortgage financing.
Congress has passed a resolution that preserves the areas where homes are eligible for USDA loans. The bill must be signed by the President before becoming law, but that is expected to happen shortly.
USDA loans are popular with many Buyers because they can be an affordable way of purchasing a home. The loans are available for properties in specific geographical areas designated by the government.
The decision by Congress means that the home we currently have listed in Calera will continue to be eligible for USDA’s no-down-payment financing:
If you want to buy a home in Birmingham’s Chelsea or Calera area using USDA no-down-payment financing, you may be wise to buy sooner, rather than later.
March 27th is the deadline by which earlier reports indicated that USDA would be dropping those areas from its list of eligibility.
But Gloria Jackson, a Lender with First Federal Mortgage in Birmingham who has spoken with USDA, says exactly what will happen by the end of the month remains unclear:
You can reach Gloria by calling 205-965-2167. Click here for her website and e-mail link…
When you can get into a nicely upgraded 3BR home (with new granite counters, new stainless appliances, new paint, new flooring and more) for less than $103,000 and, then, on top of everything else, get a no-down-payment loan…well, that’s a seriously good deal.
This is yet another case where you could own your own home for less money than it would cost to rent.
The home is located at 2148 15th St in Calera.
It’s less than a ten minute drive to I-65, making access north into Alabaster, Pelham and downtown Birmingham easy.
What makes this so outstanding is the price: $102,900.
Check out our narrated video that shows the treats awaiting inside:
If you know of someone who might be interested (or if you are), we’d suggest acting sooner, rather than later. Deals like this don’t last long…
If you’re thinking of buying a home in Shelby County’s Calera or Chelsea area and are planning on financing your purchase with a no-down-payment USDA loan, you better get moving with your purchase, because time may be about to run out.
As of October first, the USDA is expected to update the areas that qualify for its loans. For Shelby Co., this means that Calera—which has long been a popular spot for home Buyers using USDA financing—will be dropped from the eligibility list. Chelsea is also set to be dropped.
In Walker Co., Jasper will be dropped from USDA loan eligibility, as will Moody and Pell City in St. Clair Co., and Pleasant Grove in Jefferson Co.
In all, more than 90 communities will be removed from the list of qualifying areas.
The change in qualifying areas is not a 100% sure thing. At least one U.S. Congressman—Republican Jeff Fortenberry of Nebraska—is pushing to get Congress to order a one year extension of USDA’s existing eligibility zones. Others pushing USDA to grant an extension include the National Association of Realtors, the National Association of Home Builders and the Mortgage Bankers Association.
Why does USDA plan to change the zones? The answer lies partly with the 2010 Census. An existing grandfathering clause allowed any community considered ‘rural’ in 1990 to continue to be eligible for USDA funding until the 2010 Census, as long as it has a population below 25,000 and met other critera. That clause, which was first enacted in 1990 and extended in 2000, is now set to expire.
So, unless Congress takes action, many communities that currently qualify for USDA financing will lose their eligibility—and for many of those areas, USDA loans are the only source of federal housing funding.