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    USDA Rural Development Loan Overview

    If you are looking to purchase a new home, you may be eligible for a unique mortgage opportunity from the U.S. Department of Agriculture (USDA). A USDA, or rural development loan, is designed to promote home ownership in non-metro areas. In fact, you could qualify for 100% financing. The goal of these loans is to establish stable communities that generate economic development in specific geographic areas through homeownership. However, to be eligible for this type of mortgage, you don’t need to find a property in the middle of nowhere. 97% of the land mass in the United States is eligible for USDA financing, most of these properties are just outside of metropolitan city limits. Here is everything you need to know about USDA or rural development home loans.

    What is a Rural Development Loan?

    A USDA home loan goes by many names.

    • Rural Development (RD) Loan
    • Section 102 Loan
    • Single Family Housing Guaranteed Loan Program

    This type of home loan offers 100% financing which can be ideal for moderate income buyers. With no required down payment, you can have the ability to purchase sooner. This type of loan is designated for specific areas around and outside of a metro area, but many areas qualify.

    Is a Down Payment Required for a USDA Loan?

    Because this type of mortgage is backed by the USDA, lenders typically do not require a down payment. This is a great benefit of the USDA loan, however, you will still need to pay closing costs.

    What are the Income Requirements for a USDA Backed Mortgage?

    Typically, no more than 41% of your income should be allocated to future home payments and other outstanding debt. This debt to income ratio may be increased based on higher credit scores. However, it is important to note that if your household income exceeds 115% of the median income in the area of your home, you will be ineligible for a USDA loan.

    What are the Property Guidelines for a USDA Loan?

    In order for a property to eligible for a USDA backed mortgage, it must be in a solid, livable condition with no major defects. Most lenders offer this type of loan in suburban and rural areas. There is no requirement to be a first-time homebuyer, as long as you do not currently own adequate housing within a reasonable distance of the home you are attempting to purchase.

    How Do Mortgage Rates Compare to a USDA Loan?

    While mortgage rates are low in the United States currently, USDA rates tend to trend lower than the average conventional mortgage rate.

    Programs & Features of USDA Loans:

    • Lower Income Requirements
    • 100% Financing
    • Lower Interest Rates
    • Many Properties Qualify

     

    Mortgage rate options

    Every homebuyer has unique needs. Standard Mortgage strives to meet them with quality service and individual attention. We pride ourselves in giving you the mortgage information, loan options, and convenient assistance you’re looking for, including what to expect when you apply for a mortgage loan. With a variety of loan programs and an established network of lenders behind us, we help you find the loan that best suits your needs and at a competitive rate.

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    Adjustable Rate Mortgages (ARM)

    An adjustable rate mortgage (ARM) is based on a predetermined index and margin, which can go up or down at specified intervals based on the index.

    Conventional Loans

    A conventional loan must meet nationally standardized guidelines, such as income, credit, and property requirements. Loans are subject to amount limits set by Fannie Mae and Freddie Mac.

    Federal Housing Administration (FHA)

    The Federal Housing Administration — commonly referred to as HUD — issues loans that provide affordable mortgages to the average homebuyer.

    Fixed Rate Mortgages

    A fixed-rate mortgage is the most common type of mortgage program. Your monthly payments for interest and principal never change.

    JUMBO

    A jumbo loan, or non-conforming mortgage, is for homebuyers who expect to borrow more than $424,100 for single-family residences.

    USDA Rural Development

    A USDA Rural Development loan helps rural home buyers purchase a home with no down payment, low fixed rates, simple credit requirements, and the guarantee of the federal government.

    Veterans Administration (VA)

    Veterans Administration loans help veterans — including active duty service personnel and certain categories of spouses — finance the purchase of their homes with favorable loan terms.

    Buying a home can seem like the most complicated financial process in the world, especially if you've never done it before.  

    Standard Mortgage is here to help you navigate the daunting, complicated process that lies ahead. In this eBook, we’ll walk you through the eight steps you’ll have to take before you hold the keys to your new home.

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    Home Mortgage Buyer's Guide