USDA Loans
USDA Guaranteed Rural Housing Loans
Purpose The Section 502 Guaranteed Rural Housing Loan Program is designed to serve rural residents who have a steady, low or modest income, and yet are unable to obtain adequate housing through conventional financing. These loans enable low- and moderate-income rural residents to acquire modestly priced homes. They can be used to purchase new or existing dwellings or new manufactured homes.
The U.S. Department of Agriculture’s Rural Development Housing and Community Facilities Programs office (RD) administers the program. RD does not make guaranteed loans directly to eligible borrowers, but guarantees loans made by commercial lenders. This guarantee substantially reduces the risk for lenders, thus encouraging them to make loans to rural residents who have only modest incomes and little collateral.
Eligibility An eligible applicant must have an adequate and dependable income (up to 115 percent of adjusted U.S median income and a decent credit history, and must be unable to qualify for conventional mortgage credit.
Pros
- You can qualify with a credit score as low as 640.
- USDA loans require no down payment, unlike FHA and Conventional Loans.
- The USDA Monthly guarantee fee is lowe than FHA monthly mortgage insurance in most cases, and you may be able to roll these fees into your loan.
- You may be able to roll your closing costs into your loan.
- If you already have a USDA loan, you can refinance it into a new USDA loan
Cons
- Up-front mortgage funding fee
- Monthly mortgage insurance for the life of the loan
- Stricter property standards
- Household income limits.
- Stricter debt to income requirements
Ready to talk to one of our local St Marys loan specialists about a USDA loan on a home in Camden County? Get in touch today!
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