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Guaranteed Rural Housing Loans
This program is administered by USDA Rural Development, which
serves the public through more than 800 field offices nationwide.
More rural families and individuals may be eligible to become
homeowners with the help of a USDA guaranteed home loan. When
the federal government agrees to guarantee a loan, lending institutions
can help buyers while incurring less risk. Through USDA’s
Guaranteed Rural Housing Loan Program, low- and moderate-income
people can qualify for mortgages even without a down payment.
- Have an adequate and dependable income;
- Be a U.S. citizen, qualified alien, or be legally admitted
to the United States for permanent residence;
- Have an adjusted annual household income that does not exceed
the moderate income limit established for the area. A family’s
income includes the total gross income of the applicant, co-applicant
and any other adults in the household. Applicants may be eligible
to make certain adjustments to gross income— such as
annual child care expenses and $480for each minor child—in
order to qualify. There is an automated income eligibility
calculator at: http://eligibility.sc.egov.usda.gov;
- Have a credit history that indicates a reasonable willingness
to meet obligations as they become due;
The repayment ability will be based on the following ratios:
Principle, Interest, Taxes, and Insurance (PITI) divided by gross
monthly income must be equal to or less than 29 percent.
Total debt divided by gross monthly income must be equal to, or less than, 41 percent.
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Homes That Qualify:
- Guaranteed loans can be made on either new or existing homes;
- Existing homes must be structurally sound, functionally adequate, and in good repair;
- There are no restrictions on the size or design of the home financed;
- The home must not be used for income-producing purposes;
- Homes must be located in rural areas. Rural areas include
open country and places with a population of 10,000 or less
and—under certain conditions—towns and cities with
between 10,000 and 25,000 residents.
Highlights of the USDA Guaranteed Rural Housing Loan Program
- Loans may be for up to 100 percent (102 percent if the guarantee
fee is included in the loan) of appraised value or for the
acquisition cost, whichever is less.
- No down payment is required;
- Mortgages are 30-year fixed rate at market interest rates;
- Loans may include funds for closing costs, the guarantee
fee, legal fees, title services, cost of establishing an escrow
account and other prepaid items, if the appraised value is
higher than sales price;
- Sellers may contribute to the buyer’s closing costs;
- Buyers must personally occupy the dwelling following the purchase;
- Loans may be made to refinance either existing USDA Rural
Development Guaranteed housing loans or our Section 502 Direct
housing loans;
- For purchase loans, a one-time guarantee fee equal to 2.0
percent of the loan amount is charged to the lender.
- The charge for refinance loans is 0.5 percent. Typically, the lender passes on this expense to the borrower as a closing cost.
- After the one-time fee is paid, there is no recurring monthly
expense charged for guaranteeing the loan.
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Call Theresa Springer today at 360-210-7984 to
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