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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. Sometimes good credit
and a steady income are not enough to qualify for a home
loan at a commercial lending institution, such as a bank,
savings and loan or mortgage company.
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.
Apply now for a USDA Loan.
To be eligible, applicants must:
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 $480 for each minor
child—in order to qualify.
USDA Rural Development field offices can provide information
on the moderate income limits for the areas that fall within
their jurisdiction, and can provide further guidance on
calculating household income. 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;
Have repayment ability 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.
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;
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.
USDA Rural Development field offices can determine eligible
areas.
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;
Home buyers make application with participating lenders;
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;
Closed loans have secondary market acceptability, including
Freddie Mac, Fannie Mae, Ginnie Mae pools, and many state
housing finance agencies;
Guaranteed loans are subject to the provisions of the Civil
Rights statutes, including the Equal Credit Opportunity Act.
Apply now for a USDA Loan.
Information source:
www.usdaloanapproval.com
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