USDA Rural Development Mortgage Overview
| Features | Benefits |
|---|---|
Down Payment is not required |
Borrowers without savings, or who wish to retain their savings qualify |
100% financing |
More Americans become homeowners |
No reserves are required |
Buyers do not need to provide bank statements |
Expanded qualifying ratios |
Buyers with satisfactory credit may qualify with higher Debt-to-Income ratios to accommodate high cost housing areas, etc |
Seller is allowed to pay Buyer's Closing Cost (ask USDA Specialist for details) |
Reduces out of pocket costs for Buyers |
Low minimum credit score (640 minimum credit score required) |
Buyers with non-traditional or no credit histories may qualify |
Streamlined processing with 640 credit score |
No explanations on credit with 640+ score |
Very low monthly PMI |
No monthly mortgage insurance means a lower monthly payment for the Buyers and additional cash each month |
Generous income limits based on 115% US median (not HUD) |
Deductions are available for dependents, daycare, elderly households, etc. to assist more individuals and families in qualifying |
No maximum purchase price limit |
Buyers choose the home that meets their needs and repayment ability |
NOT just for first time buyers |
All homebuyers are eligible for benefits |
Modular Homes may be eligible |
Purchases only (Manufactured Homes are NOT Eligible) |
Education/training substitute for job tenure |
Income history for ratios is waived. |
USDA is the lowest payment loan option for buyers wanting a FIXED Rate |
No MI, very low 30 YEAR FIXED rates and very easy to qualify |
Guaranteed Rural Housing Loans
To be eligible, applicants must:
- Have an adequate and dependable income;
- Be a U.S. Citizen, qualified alien, or be legally admitted to the United States for permanent residence;
- Have an adjusted annual 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 jurisdiction, and can provide further guidance on calculating household income. - Have a credit history that indicates a reasonable willingness to meet obligations as they become due;
- Have repayment ability based on the following ratios: Principle, Interest, Taxes, and Insurance (PITI) divided by gross monthly income must be equal to or less than 29 percent. Total debt divided by gross monthly income must be equal to, or less than, 41 percent.
A USDA Guaranteed Loan is a Government Insured 100% Purchase Loan. These loans are only offered in rural areas.
