I have put together a quick overview to help you understand the USDA Rural Development loan program. RD loans have many benefits, including:
- No down payment required
- Low 30-year fixed interest rates
- Seller can pay up to 6% of the purchase price for your closing costs aka seller concessions
- Low monthly mortgage insurance
- Easy to qualify
- Money to make home repairs can be available!
General Overview: For moderate income borrowers, easy qualifying with 620 FICO score, $0 down, repairs can be included.
The greatest feature, obviously is that NO down payment is required to qualify for the loan. It is meant to help average families across the country have access to affordable financing where otherwise they may not find it. They also allow for negotiation with the seller of the home to cover your closing costs. In a lot of cases, the average Rural Development loan borrower actually leaves their closing with a check BACK to them rather than bringing money in. Despite that, the interest rates and mortgage insurance are typically the same or lower than any other mortgage loan available.
Our local Michigan area is prime for qualifying for a Rural Development loan. Contact me for more information on RD loans or to start applying!
Type of Homes Rural Development Loans can finance: Most property types. Single Family Properties, Site Condos, Modular, Stick-Built, BOCA-Code, large parcels, and some unique properties will qualify. Attached Condominium Properties are acceptable if they are approved condominium projects, you can contact your lender to check on approved condominiums. Manufactured properties will NOT qualify.
Down Payment Required: No down payment is required. Any down payment can be a gift from family, friend, or employer.
Mortgage Insurance: 1% financed into your loan, and .35% yearly mortgage insurance is added to the monthly payment.
Interest Rates: Little variance between lenders, though some shopping may still be required.
Maximum Loan Amount: No maximum loan amount.
Income Limits: Income limits vary by County
Credit Requirement: 620 FICO with minimum credit requirements, though this may vary by lender. 36 months from Bankruptcy or Foreclosure.
Reserves: No reserves required.
Repair Escrow: Available on all properties with contingency plan.