Rural Home Loans

About USDA Rural Home Loans

USDA stands for the United States Department of Agriculture. A USDA rural development home loan provide low-cost government-insured mortgages that suit a variety of home purchase options and refinance if you already have a RD loan.

Rural Home Loans offered today:

Currently, there are two kinds of USDA rural home programs available for single family households:

. Guaranteed Rural Home Loan Program
USDA Guaranteed RD Loans are the most common type of USDA rural housing loan. Guaranteed Loan borrowers may have an income of up to 115% of the median household income for the home’s area. Area income limits for this program can be viewed here.

. Direct Rural Home Loan Program
USDA Direct Housing Loans are only available for low and very low income households to obtain home ownership, as defined by the USDA.  Click here to see area income limits for this program.

USDA Rural Development Home Loans versus Conventional Loans:

 A USDA Rural Development Home Loan is more credit-flexible
USDA mortgage loan credit requirements are not completely score driven.  A 620+ credit score is extremely helpful to get an approval.  As long as the borrower has recovered from previously negative circumstances in a reasonable manner, they’re generally going to be eligible for an rural home loan.

 USDA loans have low mortgage insurance
USDA rural mortgages, as compared to a conforming loan, carry low interest rates and low mortgage insurance.

 USDA Mortgages require nothing down
USDA Mortgages have no down payment requirement.

USDA Rural Home Loan Program Eligibility:

To be eligible for an Rural Loan, monthly housing costs (mortgage principal and interest, taxes, and insurance) must meet be below 29% of your gross monthly income (29% ratio). Your credit background will be considered, too. At least a 620 FICO credit score is required to obtain an USDA approval through most lenders. You must also have enough income to pay your housing costs plus all additional monthly debt (41% ratio). These ratios may be exceeded somewhat with certain compensating factors.  Maximum USDA Guaranteed Loan income limits for your area can be found at here. Maximum USDA Direct Loan income limits for your area can be found at here.

See more on USDA Mortgage Requirements.

Maximum amounts:

The maximum amount for an USDA rural loan is determined by:

Maximum Loan Amount: The is no set maximum loan amount allowed for an USDA Residential Loan. Instead, your debt-to-income ratios will dictate how much home your can afford (29/41 ratios). Additionally, your total household monthly income must be within USDA allowed maximum income limits for your area. Maximum USDA Guaranteed Loan income limits for your area can be found at here.

Maximum financing: The maximum USDA Rural Loan amount will be 102% of the appraised value of the home (100% plus the 2% USDA rural home loan guarantee fee).

How much is the down payment and closing costs for rural area home loans?

Are you curious what is the minimum down payment for an USDA Rural Loan? USDA Mortgage Loans require no down payment and they allow for the closing costs to be included in the loan amount (appraisal permitting).

What property types are allowed for the rural home loans program?

While USDA Mortgage Guidelines do require that the property be Owner Occupied (OO), they do allow you to purchase condos, planned unit developments, manufactured homes, and single family residences.

Can I get an USDA Mortgage after bankruptcy?

Criteria for USDA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for three years or more, you are eligible to apply for an USDA rural development home loan. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make a USDA Loan application.

Learn more about USDA Loans.

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