Guaranteed Rural Housing Loans
There are two ways in which the USDA helps borrowers achieve the American dream of home ownership.
- USDA Guaranteed home loans – This is the most common loan offered, in this scenario a lending institution provides the homeowner with a loan. The USDA then insures the loan in case of default by the homeowner in turn reducing the risk of the lending institution.
- USDA Funded Home Loans – In this scenario the USDA lends the money directly to the homeowner.
Both of these options are there to help people that would not normally qualify for a mortgage become homeowners. The guarantee provided by the USDA helps low and moderate income families with little money for a down payment achieves home ownership.
To be eligible, applicants must:
Have dependable income that is adequate for the repayment of the loan. This income should be verifiable and continuing for at least 24 months. For example social security benefits that will be discontinued in six months may not be included for qualifying. Income that is tax exempt may have the tax savings added to income figures.
Be a U.S. citizen, currently reside in the United States or a qualifying territory, qualified alien, or be legally admitted to the United States for permanent residence;
Must meet Moderate income limits as determined by the USDA home loan program.
Automated income eligibility calculator
Credit history that shows responsible repayment of debt;
Must not have debt payments that exceed 41% of their gross income. The ratio is calculated by dividing the homeowner’s monthly debt payments by their gross income. These debts include, but are not limited to, new mortgage payment (principle, interest, taxes, and insurance), car payment, loan payment, credit card payments, child support, alimony and any other payment that will take longer than six months to fulfill.
Homes That Qualify:
- A newly built or existing home
- Modular new and existing homes
- Home must provide safe, decent, and sanitary housing and be modest in cost
- The home must meet the thermal standards of the Rural Housing and Community Development
Service - Existing homes must be in good repair and structurally sound
- There are no size or design restrictions on the home to be financed
- USDA home loans may not be used on property for income-producing purposes
- The home must not be located in flood or mudslide hazard areas
- Water and sewage system must meet the requirements of the State Department of Health
Highlights of the USDA Guaranteed Rural Housing Loan Program
- Loans may go up to 102% (With Guarantee fee included)
- No downpayment is required
- Mortgages are 30-year fixed rate at market interest rates
- 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
Section 502 Direct housing loans may be used to refinance existing USDA loans or for a home purchase. When purchasing a home with a USDA loan there is an upfront fee of 2% charged to the mortgage lender. A Refinance loan carries .5% upfront fee. This fee usually passed on to the homeowner and included in the closing costs. USDA Guaranteed Home Loans are subject to investor guidelines provided by the servicer.
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Comments (36)
Im needing to purchase a home in Marion Co, AL. I spoke with the USDA office that services the county. I was already aware that many banks offer USDA Loans, but, finding a Loan Officer that is knowledgable, and knows about the 502 Gauranteed Single Family Loan like the back of their hand is crutial. A Loan Officer that is not a specialist may deny a loan, where as an Officer that specializes in these type loans greatly increases my chances of being approved for a loan. I realize that the USDA servicer for my county cannot provide me with this detrimental advice, I hope someone can help. Please, advice is desperatly needed soon. Thank You!
I heard recently that the guarantee fee went to 2.65% [used to be 2%]. Is that true?
Hi, im looking to purchase a home I was told I qualify for a usda loan 170000. My problem is the homes Ive looked at are pretty much run down. I read online about usda construction to permanenwwitht loans and loans that can be used for lane purchase (all usda). Where do i go to get started? Any help would be greatly appreciated.
Can the home I want to purchase still qualify for a USDA loan if it has wood heating?
So we qualified for USDA. We found a house, got accepted. That was back in December 2011. We were told that we would be signing the first week of February 2012. Then we were told USDA takes 30 days for underwriting. We had to file for an extension. The end of February came, and then were told first week of March. We had to get another extension. Then we were told we should be signing last week. We had to file for another extension, and then we were put on hold because we had to get our credit ran again, because we’ve been in the loan for 90+ days. My husbands credit score went below what they except so we had to wait for the bank that he has a shared credit card through in order to get the process going again. That took a week. We were then told that this is our last extension. We can not get anymore. So if we don’t sign by the 22nd of March we don’t get a house. We don’t have anymore money in order to re-apply for the loan. Does anyone know if there is any legal action we can take?
I’m trying to sell a home to a couple that are “pre-approved” for a USDA loan. How is it that you are out money? Do you have to pay every time you file an extension? Were you ever told you were pre-approved? OR just approved? HAS anyone told you that the home you were trying to buy MUST have a stove in it? *that could be s state by state thing*,,,,I do wish you well, it’s all beginning to sound like a good deal at first, but then kind of a government scam!
I filed bankrupcy forfieting my home 2 years ago. The bankruptcy has been discharged now 2 years. Is it possible to qualify for a USDA home loan?
How long does a USDA certification take? The lender has approved the loan as long as everything goes ok with the USDA does anyone know how long this will take? I live in Ky.
2 to 3 days usually
We are the sellers and the loan was approve and until Usda deceided the credit was all in her name and not his. So the deal fell though. Also was wonder if there has to be a appraisal for the property. There is none in the broker file. Please repley
Im interested in the guarenteed loan but have no credit history does non traditional credit qualify?
I was told that the USDA loan covers only up to 60 miles away from your place of employment from my realator… but i haven’t read anything on any of the forums or information on the net, is this true? does anyone have any information reguarding this?
Are there any restrictions in paying a home with a pool on a USDA loan?Or on how big sq ft we can buy?
Would a house with 10 acres qualify?
preapproved for 130,000 usda loan house we want is 95,000 could we get some of the extra money for improvements with this type of loan
I am trying to sell my house to a couple that is pre-approved with a USDA loan. The buyers talked to thier loan officer today and were told that the in-wall 30,000btu propane heater did meet their requirement of being high efficency and that they could not loan the money on my house? Really? Why not?
Jason,
It would depend on the type of USDA loan the buyers were approved for. The buyer may have been looking for a property that was eligible for rehabilitation.
My loan application has gone thru the underwriters fine, how much longer to get loan?
Are there any approvaded banks to help or loan officials to help w the applaction in ocean county
Cape May Information Center
4 Moore Road, Building 16
Cape May Court House, NJ 08210
Phone:(609) 463-5917, Fax: (609) 463-8122
Hours: Friday (9:00 am – 2:00 pm)
E-mail: john.bartolone@nj.usda.gov
I am a 100% disabled combat veteran also on social security and want to buy retirement home in Greensboro,GA for $333,000. My current home is in a slow selling market in NJ, so I have to rent that property. Can I use the rental income and still get the USDA home loan. Are there any restrictions I should be concerned about.
I sold my pri residence in Sept 2011, spoke w/loan officer, she assured me I qualified for USDA. I have a rental in the same city. Started search in Jan 2012, found and offered on a rual house, within an hour after offering I received a call from the mortgage co that I did not qualify for USDA because of the rental:no further explaination.
I am looking at my first home and it is $63,000. I was told I could get a USDA loan for 4% interest and nothing down, but 2% is added to the top of the loan, so my loan would be $64,260, plus other monthly fees. AND I am required to take out the loan for 30 years. As opposed to 4.25% over 20 years with 5% down or 4.375% over 30 years with 5% down. It seams to me that I would be paying 20k more total with USDA in order to not have to pay my 5% down. Can someone please help me with this? I was told USDA was the better option. What am I doing wrong.
You are forgetting that with less than 20% down you are going to be paying PMI or MI with FHA and it may be tax deductable if you take the USDA
For a USDA loan, does the house have to have any of the appliances in it?
Heating, cooling, and water.
I am in the process of buying a home have been already approved for usda loan.. I was in contract and almost done, then all of a sudden my realtor said the contract fell through because the seller has not owned the home for 90 days .. so we would have to start a new contract.. I would like some info on why this happend…
Andy,
Most likely the home you wanted to purchase was a “flip”. New regulations require that when an investor purchases a “flip” home that it is to be held for 90 days before qualifying for a mortgage. This was put into place to minimize mortgage fraud with the short sale and bank owned properties.
I am looking to buy a house for 80000 and I need a loan. I have no credit score yet but I can provide proof that I paid for rent where I live for 9 months and 2 other ways to prove I can pay for my payments. Is there any way I can qualify for the usda loan?
Marylou,
Determining eligibility is typically done by your local USDA office or a USDA lender. Below is a link to your local office.
http://www.rurdev.usda.gov/recd_map.html
my home was financed threw u.s.d.a loan, I want to sell it, I’ve owned it a year, is there a waiting period on those loans ,
Will USDA loan on existing mobile homes attached to land?
Jeff,
There are many specific details that would need to be addressed in your situation . I would recommend you contact your local USDA service center. Here is a link http://www.rurdev.usda.gov/recd_map.html
What banks work with USDA loans?
Patti,
Many lending institutions offer USDA home loans and even the USDA offers direct loans when funds are available. Usually the challenge is finding the right loan officer with experience in the program.
Sam
Anyone know a good loan guy