Did you know that the United States Department of Agriculture offers a federal program to help low- to moderate-income rural Americans become homeowners? It’s called the USDA Rural Development Single Family Housing Guaranteed Loan Program; although some people call it a “USDA loan” or “Rural Housing Loan.” This program helps qualified individuals buy or refinance homes with affordable interest rates in qualified rural areas.

Some of the benefits of this program include:

• It’s not limited to first-time homebuyers.
• Flexible credit guidelines are used in qualifying homebuyers. Non-traditional credit histories may be accepted.
• You can finance 100% of your home’s purchase price.
• No down payment is required.
• There’s no maximum purchase price on the home. However, you must meet certain qualifying ratios and have a stable income to determine how much home you can afford.
• Any eligible repairs and improvements to the home can be included in your loan.
• You can receive low USDA mortgage interest rates.
• You’ll receive low monthly mortgage insurance rates. For home purchases and refinances, a 2% upfront fee is required at closing, based on the loan size. However, you can finance this fee into your loan. Thereafter, for all loan types, you’ll pay a 0.4% annual mortgage insurance fee based on your remaining principal balance.
• Typically you’ll pay low closing costs; however these costs can vary by lender and your location. Also any eligible closing costs and lender fees can be included in your loan.
• There are no prepayment penalties.
• No homeowner counseling is required.

You must meet some guidelines to qualify for this program, which include:

• You must buy a home within an eligible rural area. The home can be an existing home, new construction, a modular home, a new manufactured home, an eligible condominium or a planned unit development.
• The home must be your primary residence. It cannot be a vacation home or an investment property.
• The home must be a residential property. It cannot be a working farm.
• Your household income cannot exceed the established limits based on where the home is located.
• You must have a reasonable credit history.
• You must be able to afford your mortgage payments, including taxes and insurance.
• This program offers 30-year fixed rate mortgages only.
• You must apply for this type of loan through an approved lender.

If you have any questions about USDA Rural Housing Loans, contact the senior mortgage specialists at Grandview Lending. They can explain the program to you and provide you with a mortgage rate quote.

Photo credit: iStockphoto