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)
- 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!