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USDA Loans

The USDA Rural Development’s Guaranteed Rural Housing (GRH) Loan Program was designed to assist home buyers wishing to purchase houses in designated rural areas. A potential borrower will have a dependable income, which will fall within USDA’s income limits based on the County the borrower wishes to purchase in, along with a satisfactory credit history which qualifies them for a conventional mortgage but may lack the funds to provide a down payment.   The highlights are first and foremost 100% financing which means no required down payment. In addition all USDA loans are 30 year fixed rates (no adjustable rates), which require no monthly mortgage insurance payments(a one time 3.5% USDA Guarantee fee is added to the loan balance), and seller concessions are allowed to help pay for closing costs. Also you do not need to be a first time home buyer and the house can be either existing or new construction. And finally there are no additional cash reserve requirements for approval.   However there are some limitations to this program as follows. Income limits are 115% of the U.S. median income amounts and the borrower cannot own any other properties. The borrower must also have a credit score of 620 or higher(scores below 660 must be manually underwritten and approved) and the source of income must be adequate and dependable. Existing homes must be structurally sound, functionally adequate and in good repair. Houses with pools can be financed by the USDA but value cannot be added to the appraised value of the property for that pool. The home must be only for the use of the borrower and cannot be used for income producing purposes.  

All in all this program is very good for the borrower who qualifies and has allowed many homebuyers to get into a house that might not otherwise have been able to do so. Please don’t hesitate to contact me if you have any questions.