Below we have listed some quick facts and benefits of USDA Rural loans.
- 100% Financing – NO down payment. Approved buyers can borrow up to 102% with financing USDA Funding Fee.
- No First-Time Home Buyer Requirement – You don’t have to be a first-time homebuyer to benefit from this program. Under certain circumstances, you can even own another home!
- USDA Rural Development has TWO different loans. Rural Development loans are broken down into two different loan types: USDA Guaranteed Rural Housing (502 Guaranteed) Loans and USDA Direct Loans. USDA Guaranteed loans are originated through local Lenders, Banks and Brokers. This program is generally geared towards moderate-income borrowers. The USDA Direct Loan is originated directly through the USDA office.
- Increased Income Limits – Based upon the number of people in the household: 1 to 4 = $110,650. Read more about the USDA income limits.
- Approved Locations For USDA Loans – USDA loans can be used in many locations, even in more populated states like California, Florida, Georgia, and Texas. Learn more about where USDA loans can be used.
- NO Monthly Mortgage Insurance – Compared to FHA mortgages, mortgage payments on USDA loans are less because of the lack of mortgage insurance.
- Seller Contributions For Closing Costs – Most lenders and bank limit to 6% of the purchase price, which is often more than enough to cover the buyers closing costs.
- Flexible Credit and Qualifying Guidelines– A 620 credit score is preferred. However, lower credit scores from 600 are possible with good compensating factors.
- Finance Closing Costs– Borrower’s closing costs/pre-paid items can be financed into the loan as long as there is room between the purchase price and the appraised value. No other loan program allows for this.
- Appraisal Requirements– The appraisal requirements for RD loans are similar to standard conventional loans.
- Finance Required Repairs– Any lender-required repairs can be financed into the loan, up to 10% of the purchase price. 150% of the repair amount is required. Of the 150%, 50% has to be from the borrower or the seller for any cost over-runs. Work has to be from licensed professionals. Upon completion, any money left over is returned.
- NO Loan Limit– Unlike FHA or Down Payment Assistance programs, GRH loans have no maximum sales price limitation. The maximum sales price allowed is determined specifically by the buyer debt to income and financial situation.
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