USDA Single Family Home Loan Guarantees
What does this program do?
This no down payment, 100% financing program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may purchase existing homes (which may include costs to rehabilitate, improve or relocate the dwelling) or build new.
This program is NOT restricted to first-time homebuyers.
Who may apply for a USDA Loan?
• Have a household income that does not exceed 115% of median household income.*
• Agree to occupy the dwelling as their primary residence.
• Be a U.S. citizen, U.S. non-citizen national, or Qualified Alien.
• Be unable to obtain conventional financing with no private mortgage insurance (PMI).
• Not be suspended or debarred from participation in federal programs.
What properties are eligible?
• Must be located within an eligible rural area.*
• Must be a single-family dwelling (may include detached, attached, PUD, condo, modular, and manufactured).
• Must meet HUD 4000.1 minimum standards.
• No set maximum purchase price (based solely on applicant repayment ability).
• No set acreage limits. Must be common for the area.
• No seasoning requirements (“flipped” properties allowed).
How can I check on a specific address?
What are applicant qualifications?
• Income. Non-Self-Employed: One-year history required. Self-Employed and Seasonal: Two-year history required.
• Assets. No down payment or reserves required.
• Credit. Must demonstrate a willingness and ability to repay debts. No set score requirement. Alternative credit allowable for those with no traditional credit.
• Monthly housing payment. Total payment (principal, interest, taxes, insurance, HOA dues, RD annual fee) typically should not exceed 29% of gross monthly income.
• All monthly debt payments. All payments included on credit report, including proposed new mortgage payment, typically should not exceed 41% of gross monthly income. Student loan payments. Fixed payment: use actual payment or 1% of loan balance. Non-fixed payment (IBR, graduated, adjusted, etc.) plans: Use 0.5% of loan balance.
• Seller (or interested party) contributions. Not to exceed 6% of sales price.
• Gift funds. No limit
What types of loan products are available?
• Purchase existing or build new with the Single-Close construction program.
• Current USDA Rural Development loan holders can take advantage of lower rates by utilizing one of Rural Development’s refinance options.
• Interest rate is negotiated between the applicant and the lender. Rate must be a 30-year fixed rate.
• Program lending is extended to 100% of appraised value, not purchase price, so borrowers may potentially include closing costs and home repair expenses into USDA financing.
• Funds may be used for closing costs, reasonable and customary expenses associated with the purchase transaction, connection fees for utilities, tax and insurance escrows, essential household equipment, site preparation.
All program information provided was gathered from rd.usda.gov. NOTE: Because citations and other information may be subject to change, please always consult
program information at: rd.usda.gov. Go to the “Programs and Services” tab and then select “Single Family Housing Programs.” USDA is an equal opportunity provider, employer, and lender.