This article has been corrected to reflect the accurate income guidelines in place for the USDA mortgage program.

The market for no-money-down mortgages has essentially dried up since the subprime mortgage crisis hit. But Jamie Lewis knew there had to be a way to buy a house while paying little to no money up front.

On April 25, Lewis will move into a house in Windsor he purchased for $88,000. He's making a $1,000 down payment.

Lewis is part of a growing number of Maine residents who have looked to the U.S. Department of Agriculture for no-money-down deals in a tight credit market.

The federal agency backed 881 such loans in Maine in fiscal year 2008, according to the USDA. That's more than double the 409 loans the program produced in 2007. The agency has guaranteed 450 Maine loans so far in fiscal 2009, which ends Sept. 30.

"You have to have a little bit of money," Lewis said. "But it beats paying thousands of dollars."

The USDA-backed loan, part of the agency's rural development program, comes with restrictions.

It applies only to single-family houses in areas the USDA considers rural, said Mike Jenkins, an area specialist at the USDA office in Lewiston. In Maine, he said, that's all but a few of the state's largest cities.

To buy Maine property, Jenkins said, borrowers secure fixed-rate loans from in-state banks or work with Maine mortgage brokers. Borrowers pay a one-time fee -- 2 percent of the loan value -- to the USDA to insure the loan. They can finance the insurance fee as part of the loan.

"The program's definitely taken off," Jenkins said. "It's escalated, without a doubt, and part of that is a lot of the private, no-money-down 100 percent programs have gone away."

Borrowers must meet income and credit guidelines determined by the USDA. In most of Maine, a person living alone would need up to $49,550 in annual income. A family of four would need to make $70,750 annually or less, according to the USDA. The borrower's income, however, can't exceed 115 percent of the median county income.

Homebuyers cannot spring for opulent properties with the USDA-backed loan. In-ground swimming pools, for example, are prohibited. And the properties cannot be income-producing.

"What it's really good for is someone who has decent credit, good stability, but they just don't have the money for a downpayment," Jenkins said. "A lot of people, they just don't have those kinds of funds available."

Affordable Mortgage, a broker with offices in Augusta and Farmington, has lined up 36 borrowers with no-money-down, USDA-backed mortgages since the broker began matching home-buyers with them in 2007, said Patti Cross, a loan officer and processor.

"It's been around for a while, but there were not a lot of people using them because there were no-money-down mortgages with the subprime mortgages," Cross said.

Borrowers often fold closing costs -- including a broker's fee -- into the loan amount, she said.

Default rates on the USDA loans have been lower than default rates for low down payment mortgages backed by the Federal Housing Administration.

In 2008, 11.35 percent of USDA-backed loans were delinquent and 1.4 percent went into foreclosure, the Wall Street Journal reported in December. During the same period, 13.6 percent of FHA loans were delinquent and 2.3 percent went into foreclosure.

By comparison, 4.3 percent of conventional prime mortgages were delinquent in 2008 and 1.6 percent went into foreclosure. Twenty percent of subprime loans were delinquent, with 12.9 percent in foreclosure.

Lewis, who is preparing his move to Windsor, looks forward to leaving his days of renting behind.

"It'll be nice to be out there," he said, "and have a little space."

Matthew Stone -- 623-3811, ext. 435

mstone@centralmaine.com