Quick Guide to

USDA Home Loans, Rural Development

Guarenteed Rural Housing Loan, Not

just for

  rural areas anymore....

Advantages to USDA Mortgages:

No Down Payment Required !

• 30 year fixed rate.

• 102% LTV (100% plus guarantee fee)

• Finance Closing Costs If Appraisal Is Higher Than Sales Contract.

• No Mortgage Insurance.

• No cash contribution required from borrower.

• Unrestricted gifts, no need to document source.

• No Maximum Loan Amount.

• No Reserve Requirement.

• High earnings potential.

• Competitive rates (set by underwriting lenders).

• Available secondary markets: wholesale lenders as well as Fannie Mae and Freddie Mac.

• Delegated underwriting for D.E. FHA, Fannie, Freddie, and VA approved underwriters.

• Utilize in Conjunction with State Housing Authorities, if available.

•  Have a credit history that indicates a reasonable willingness to meet obligations as they become due.

• Lender underwrites the loan.

• Streamlined credit approval when primary applicant has a middle credit score above 620.

• Lack of credit is not derogatory.

Check maximum income for eligibility:

Applicant(s) have an adjusted 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 jurisdictions, and can provide further guidance on calculating household income. There is an automated eligibility calculator at: http://eligibility.sc.egov.usda.gov

Loan-To-Value (LTV) and Loan Limit:

• 100% LTV plus the amount of the guarantee if financed.

• Loan amount can exceed appraised value by the amount of the guarantee fee.

• There is no loan limit.

-Limiting factors will be ratios and income limit.

Property requirements:

• New or proposed home construction:

Meet the county and state code. Use conventional appraisal (new homes only).

• All existing homes: Meet requirements of HUD Handbooks 4905.1 and 4150.2 and comply with Rural Development thermal criteria. Contact your local or state Rural Development office for alternatives to HUD Handbooks and the thermal criteria for a particular area. Loan funds may be used for repairs. Typically repairs must be completed prior to Rural Development issuance of the Loan Note Guarantee

• Both new and existing: Private well water quality must meet local and state code.

Existing (previously occupied) manufactured home: Cannot finance under this program.

New manufactured homes: Rural Development will finance new manufactured homes through approved dealer-contractors.

Condo: Rural Development can finance if it meets the standards for Fannie Mae, Freddie Mac, VA, or FHA.

Town home: Same as condo. A town home must have provisions for maintenance such as HOA.

One time guarantee fee of 2% of the final loan amount (it is only .5% on refinance of an existing Rural Development guaranteed or direct loan).

This fee can be financed along with other closing costs. The first mortgage guaranteed loan cannot exceed appraised value by more than the amount of the fee financed. No mortgage insurance requirement.

Term: 30 year fixed

Prohibited Loan Purposes:

• Co-signors not residing in the household.

• In-ground swimming pools.

• Existing manufactured homes.

• Construction draws

• Furniture and personal property

• Income producing property

• Non-essential buildings and land

• Simply complete the Information Request Form and a USDA Home Loans expert will assist you or apply now.