Under the Guaranteed Loan program, the Rural
loans made by private sector lenders. (A loan guaranteed through RD means
that, should the individual borrower default on the loan, RD will pay the
private financier for the loan.) The individual works with the private
lender and makes his or her payments to that lender.
Under the terms of the program, an individual or family may borrow up
to 102% of the appraised value of the home, which eliminates the need for
a down payment. Since a common barrier to owning a home for many
low-income people is the lack of funds to make a down payment, the
availability of the loan guarantees from RD makes the reality of owning a
home available to a much larger percentage of Americans.