USDA/Rural Development Loans
USDA Loan Highlights
What does this program do?
The Section 502 Guaranteed Loan Program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe, and sanitary dwellings as their primary residence in eligible rural areas. Qualified applicants may purchase, build, rehabilitate, improve, or relocate a home in an eligible rural area with 100% financing. In addition, the program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural homebuyers – so no money down for those who qualify!
Who may apply for this program?
Applicants must:
- Meet income eligibility (cannot exceed 115% of median household income)
- Agree to occupy the dwelling as their primary residence personally
- Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien
What is an eligible rural area?
Utilizing this USDA’s Eligibility Site you can enter a specific address for determination or just search the map to review general eligible areas.
Why does Rural Development do this?
This program helps lenders work with low- and moderate-income households living in rural areas to make homeownership a reality. Providing affordable homeownership opportunities promotes prosperity, which in turn creates thriving communities and improves the quality of life in rural areas.
- 100% financing + required guarantee fee = 102% of the appraised value
- Low FICO score requirements
- Low-interest rates
- Low closing costs
- Gift funds can be used for closing costs
- Fixed-rate mortgages protect you against rising rates since the interest rate remains the same for the entire term of the loan. There are several options when choosing a fixed-rate term. Shorter terms on the mortgage will allow you to build more equity in the home on a year-over-year basis. Keep in mind you can use equity as a down payment for your next home or a future cash-out refinance. If you plan on staying in your home for a longer time frame, a fixed-rate mortgage could be the right solution for you.
USDA Loan Eligibility
- Property must be located in a USDA-designated rural area
- Maximum loan limits vary based on location
- Household members can have a total income of up
- 115% of the median income for the area
- Households must be able to afford the mortgage payment, including property taxes, homeowners insurance, and the annual guarantee fee payable on a monthly basis
Other Program Options
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