Are you thinking of buying a home in a rural area? Are you looking for a “no money down” option to financing? Then the USDA Rural Development Single Family Housing Guaranteed Loan Program may be the solution to your financing concerns.
Also called a “USDA loan,” “rural housing loan,” or “Section 502 loan,” a USDA Rural Development Guaranteed Loan is insured by the U.S. Department of Agriculture and helps low-to-moderate income buyers purchase a home. While a USDA loan is similar to other loan types, this type of loan lets you finance 100% of a home’s purchase price. And you can often get better-than-average mortgage rates.
Program features include:
- Available to first-time and repeat buyers.
- No maximum purchase price. However, qualifying ratios and income requirements apply.
- 100% financing, no down payment required. However, the loan amount can’t exceed 100% of the appraised value plus the guarantee fee.
- 30-year fixed rate mortgage only currently. 15-year fixed rate mortgage available in September 2014. No adjustable-rate mortgages.
- Eligible home repairs and improvements can be included in the loan.
- A guarantee fee required, however, it can be rolled into the loan amount.
- Eligible closing costs and lender fees can be included in the loan.
- No prepayment penalties.
- Homeowner counseling is not required.
However, to obtain a USDA loan, you and the home must meet certain qualification requirements:
- Your family must be currently without adequate housing.
- You must have an income of up to 115% of the median income for the area you’re interested in purchasing within.
- You must be able to make your monthly mortgage payments as well as pay your taxes and insurance.
- You must have a reasonable credit history.
- The home must be a primary residence. No vacation homes or rental properties are applicable.
- The home must be located in a rural area. However, many small towns and suburbs of larger cities meet this requirement.
- The home must be modest in size, design and cost. Eligible property types include existing homes, new construction, modular homes, Planned Unit Developments, eligible condominiums and new manufactured homes (permanently installed and meeting all HUD standards).
If you’re interested in financing a rural home through a USDA loan, contact the mortgage specialists at Grandview Lending, located in Indianapolis. Call us at 866.690.4920 or complete our online form by clicking here. We can answer your questions and help you find a USDA loan to meet your needs.
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