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No Credit Needed To Buy A Home With FMHA

Sam Staffen

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When I was 18 I had a friend and his mother was a real estate agent. I was working and had told her that I was looking to spend some of my money either on a car or a house. I just wanted to spend some money more wisely than I currently had been.

She asked me if I had any money to put down on a house and I told her how much, about $900. She then informed me that was not quite enough to buy a home in the regular fashion. I asked her why and she told me that because I was so young I would not have good credit and would need a much larger down payment. I asked how much larger and she stated that I would need about 20% down.

I am a very good at math and immediately picked up on that. I could have afforded a house in the area of $4500. This was early 1982 and not 1882. $4500 would not get me much more than land in Timbuktu with a 30 year old used trailer and no electric or plumbing. Pretty easy to figure that out. I was beat for all intense purposes of buying a house.

A few weeks went by and I was talking to her again and I told her I had a little over $1000 saved. I was obviously working on the same thing at this point. I told her I thought a car was a bad investment but that I had applied for a car . loan. She asked how much the down payment on the car would be and I told her my 1973 Pinto was being used as the down stroke. She realized that meant I still would have all my money to put on a house.

She then tells me that I may be able to get a house from Farmers Home Administration with nothing more down than escrow. What is escrow I asked? She told me it was basically the money used to file paper work and do surveys and such. How much is escrow? She said that around the area it was generally less than $600. Well that just leaves me with a down payment of just over $400 I said. She said that with FmHA I would not need a down payment. She had already told me but I did digest it correctly. Really? No down payment?

I asked her when I could get started on this and she said tomorrow, if I were serious. I was plenty serious. Why not own my own house rather than renting? I went to her office the next day and she had a few houses for me to look at. I picked the third one we looked at. I really had no preference, I was 18. A house was a house. She said o. k. and drove me back to her office and I signed paper work on the escrow.

Three weeks later I was the proud owner of an old house. It was a one and a half story home with a Michigan basement and a two car garage on two lots. It was awesome, I was a home owner. I could now make my own rules. No more signing contracts with landlords. Heck! At that time a contract was not even for a whole year like it is now. I learned the process of how to buy a home through the Farmers Home Administration in the process. What an awesome program FmHa is.

Each process has an order that you have to do them in. There is no real set order in which to do the processes. That is kind of confusing I realize so I will show you what I mean. The first process tells you if your are eligible for an FmHA loan. The second process is the paperwork needed to sign the deed. The last is the selection, paper work, and purchasing the home.


*You must not be able to finance with regular lending company.

*You must be an adult of at least 18 years of age.

*You must be a legal American citizen.


*You must fill out a budget showing how much money you spend in all areas

of you ever day life. Including an allowance for non-necessities.

*You must show pay stubs and length of time in current work.

*You must have a Tax Form stating your income.


*You must put money in escrow. Your agent will assist you as to the amount.

*You must pick a home. You can pick either a current FmHA foreclosure or
you can create a new loan.

*You must let FMHA send adjusters the house to make sure it is ready to live
in. They can not sign loan on a house that is either not livable or the owner
does not have extra money loaned to them for the reparations.

*You must have estimates done on all work necessary for FmHA to consider
it ready to be lived in.

*You must sign paper work agreeing to the conditions of the loan for

*You must buy insurance for the home. The home has to have current and up
to date insurance at all times during the loan period with FmHA.

*You must sign for the home

*You must sign the deed and/or abstract.

Now you own a home thanks to FmHA. Take in note that no one can be turned down for bad credit. Take in note that I bought my home through FmHA four days short of two months prior to my 19Th birthday. I was two and a half months at my job. How much credit do you think I had?

You may be skeptical in reading this because I am discussing something that occurred in 1982. I just recently took a second cousin in and she was approved in Oakland County Michigan for $162,500 total loan including reparation and cost of home.

It doesn't take any real time to do this whole house buying venture either. It took me inside of three weeks from the first visit to pick the house with my friends mother. Five years ago I told my sisters’ neighbor the whole process and she was moved out inside of three weeks.

There are many more great things about this program that I will not cover. I simply do not want to put all that much information in this one article. I will be writing another article that will include tips on nearly everything you have to do in each process. Some things, like signing the abstract, there isn't much advice I can give. Uh! Oh yeah! Sign your John Henry where they tell you to. I guess I did give you a hint after all.

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