The Guaranteed Rural Housing Loan Program is offered through the Rural Housing Service (RHS), an agency of the USDA. The program is designed to help low-to-moderate income families achieve homeownership in eligible rural areas.  To see eligible areas click here.
These loans are 100% financed, requiring no down payment.  First time home buyers can use this loan as well as home buyers who have owned multiple times.  However, a buyer cannot own a home at the time of closing with a USDA loan.  The only exception is if the home buyer had to move due to a job relocation.  There are specific requirements for getting a USDA loan.  Here is an outline of the requirements set by New Penn Financial.
  • Max Loan Amount
    • The highest loan amount is $417,000. (DE, PA & MD)
  • Credit
    • The buyers needs to have a minimum credit score of 620.
    • There cannot be any outstanding collections accounts on the borrower’s credit report.
    • The font-end ratio cannot exceed 29%.  This is the portion of your income used to make your mortgage payment.  (This may vary with compensating factors)
    • The back end ratio cannot exceed 41%.  This is the portion of your income that is used to pay our total debt, including your mortgage payment.  (This may vary with compensating factors)
    • There is a credit depth requirement.  At least one applicant whose income or assets are used for qualification must have at least three credit lines that have existed for at least 12 months.
    • Deferred Student Loans – Even if your loans are deferred a payment will be required for qualifying.  USDA will not exclude deferred student loan payments
  • Derogatory Credit
    • No foreclosures within 3 years.
    • No short sale in the previous 3 years (if you were not late prior to the short sale you may be eligible immediately)
    • No bankruptcies within 3 years
  • Guarantee Fee
    • There is a guarantee upfront fee of 2%.  There is a monthly fee of .5%.  This is in lieu of mortgage insurance.
Wondering if USDA is a good loan for you?  Do you have any questions?
Please feel free to call or email with any questions.  My team and I would be happy to assist!