USDA RD Loans
What is an RD loan?
“RD”, short for Rural Development and “USDA” stands for the United States Department of Agriculture. USDA RD loans provides no down payment mortgage loans that suit a variety of borrower options.
What kinds of RD loans does USDA offer?
USDA Guaranteed RD Loans
USDA Guaranteed RD loans allow for higher income limits and zero-down financing for home purchases. Guaranteed RD loan applicants may have an income of as much as 115% of the median household income. Area income limits for this program can be viewed here. All USDA Guaranteed RD Loans have 30 year terms and are fixed rate loans.
USDA Direct RD Loans
Direct RD loans are less common and are only available for low and very low income households, as defined by USDA. Click here to see income limits for this program in your area.
RD Mortgage Loans versus Conventional Loans:
USDA RD loans offer many benefits and protections that you won’t find in other loans including:
USDA RD Mortgages are flexible on credit requirements
RD loan requirements aren’t totally credit score driven, though it’s usually required to have at a 620 FICO score through most RD lenders. USDA RD mortgage guidelines provide the borrower the benefit of knowing that if they have recovered from previous credit problems, they will generally be eligible.
USDA RD Loans have low mortgage insurance (MI)
USDA RD loan guidelines, when compared to a conventional conforming loans, have low interest rates and mortgage insurance. RD mortgage rates are often comparable to a conforming rates.
USDA RD Mortgages are no down payment loans
RD Mortgage Loans have no down payment. Most programs don’t allow that.
RD loan eligibility:
To be eligible for an USDA RD Loan, your monthly housing expenses must meet a specified percentage of your gross monthly income (29%). Your credit history will be looked at, too. A 620 FICO credit score is required to get RD approval through most RD lenders. You must also make enough income to pay housing costs plus all monthly debt (41%). Ratios can be exceeded with compensating factors. RD loans applicants may have an income of 115% of the area median income.
See more on RD Mortgage Requirements.
How much money are RD loan down payment and closing costs?
RD loans have no down payment and also allow for closing costs to be rolled into the loan amount.
USDA RD mortgage property types:
The subject property may be an owner-occupied condo or single family residence.
Learn more about USDA Loans.