USDA, RURAL DEVELOPMENT
GUARANTEED RURAL HOUSING LOAN
No Down Payment Required
30 year fixed rate
100% LTV plus the guarantee fee, if financed
Finance Closing Costs, if market value is sufficient
Expanded Ratios of 29/41%
No cash contribution required from borrower
No Maximum Loan Amount – loan amount based on repayment ability of applicant
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.
Utilize in Conjunction with State Housing Authorities, if available
Rural Development designated rural area:
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. See the rural area eligibility site at http://eligibility.sc.egov.usda.gov, click on “property eligibility”. If you need additional assistance, please contact your local Rural Development office.
Acceptable credit history:
Have a credit history that indicates a reasonable willingness to meet obligations as they become due
Lender underwrites the loan
No minimum credit scores
Lack of credit is not derogatory
Caution for applicant(s) with multiple layers of risk such as:
payment shock; low credit scores; ratio waiver; credit waivers; 2-1 buy downs
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
Applicant(s) repayment ability:
The ratio limits are 29 front (housing, PITI), 41 back (total debt, MOTI). Rural Development allows expanded repayment ratios if the applicants have sufficient compensating factors. The underwriter must recommend the expanded ratio(s) and provide compensating factors to Rural Development. Rural Development must concur with the underwriter’s recommendation in order to expand the ratios.
Other eligibility criteria:
Do not own a dwelling
Insufficient resources to secure conventional financing without the guarantee
U.S. citizen or permanent resident or qualified alien
Loan-To-Value (LTV) and Loan Limit:
100% LTV plus the amount of the guarantee fee, 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
New or proposed home construction – stick built, modular, townhouses, condominiums, new manufactured homes.
Existing homes: Meet requirements of HUD Handbooks 4905.1 and 4150.2
New and existing: Private well water quality must meet local and state code.
Existing (previously occupied) manufactured home financed under limited circumstances when home presently financed by USDA.
New manufactured homes: Rural Development will finance new manufactured homes through approved dealer-contractors. Contact your local Rural Development office for a list of approved dealer-contractors and the specifics of how new manufactured homes can be financed.
Modular homes: New or existing modular homes can be financed the same as stick built homes.
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.
Any existing improvements located in a special flood hazard area must have federal flood insurance coverage. New construction is not permitted until a Letter of Map Revision/Amendment is issued by FEMA.
One time guarantee fee based on the final loan amount
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
Fannie Mae 90 day delivery plus 60 basis points rounded to the nearest quarter percent or
The lenders published VA rate with no discount points
Prohibited Loan Purposes:
In-ground swimming pools – unless value is deducted from the loan request
Existing manufactured homes
Furniture and personal property
Income producing property
Non-essential buildings and land
Senior Loan Officer
- USDA Announces HARP-like Program (harp2.com)
- The Kentucky Guaranteed Rural Housing (GRH) Loan Program (kentuckyusdaloan.com)
- Kentucky Rural Housing USDA Guidelines 2011 (kentuckyusdaloan.com)
- Rural Housing and USDA Loans in Kentucky (kentuckyusdaloan.com)
- USDA-RD Funding Narrowband Radio (allhazards.wordpress.com)
- DRDAs likely to be dissolved: Rockybul (assamtribune.com)
- HARP 2.0 Refinance Guidelines for Fannie Mae and Freddie Mac Louisville Kentucky Mortgage Loans (louisvillekymortgage.net)
- ADC’s Expanded Portfolio of Fiber Solutions Accepted By USDA Rural Development Telecommunications Program (prweb.com)
- USDA has a new “streamline” refi program – better than HARP for USDA Refi’s. (embracehomeloans.wordpress.com)