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Guaranteed Rural Housing Loans

Potential home owners, Realtors, builders and applicants can all benefit from the Guaranteed Rural Housing program.  The combination of NO DOWN PAYMENT required and NO MORTGAGE INSURANCE needed with competitive 30 year fixed rates makes the Guaranteed Rural Housing program an attractive source of financing.

To be considered eligible for a Guaranteed Rural Housing Loan, applicants must:

• Have an adequate and dependable income;
• Be a U.S. citizen, qualified alien, or be legally admitted to the United States for permanent residence;
• Have an adjusted annual household income that does not exceed the moderate income limit established for the area.  A family's income includes the total gross income of the applicant, co-applicant and any other adults in the household.  Applicants may be eligible to make certain adjustments to gross income - such as annual child care expenses and $480 for each minor child - in order to qualify.  USDA Rural Development field offices can provide information on the moderate income limits for the areas that fall within their jurisdiction, and can provide further guidance on calculating household income.  There is an automated income eligibility calculator available at:  http://eligibility.sc.egov.usda.gov.
• Have a credit history that indicates a reasonable willingness to meet obligations as they become due;
• Have repayment ability based on the following ratios:  Principle, Interest, Taxes, and Insurance (PITI) divided by gross monthly income must be equal to or less than 29 percent.  Total debt divided by gross monthly income must be equal to, or less than, 41 percent.

• Guaranteed loans can be made on either new or existing homes;
• Existing homes must be structurally sound, functionally adequate, and in good repair;
• There are no restrictions on the size or design of the home financed;
• The home must not be used for income-producing purposes;
• Homes must be located in rural areas.  Rural areas include open country and places with a population of 10,000 or less and - under certain conditions - towns and cities with between 10,000 and 25,000 residents.  USDA Rural Development field offices can determine eligible areas.  There is an automated rural area eligibility calculator at:  http://eligibility.sc.egov.usda.gov.

• Loans may be for up to 100 percent of the appraised value plus the up-front guarantee fee.
• Mortgages are 30-year fixed rate at market interest rates;
• Loans may include funds for closing costs, the guarantee fee, legal fees, title services, cost of establishing an escrow account and other pre-paid items, if the appraised value is higher than sales price;
• Sellers may contribute to the buyer's closing costs;
• Home buyers make application with participating lenders;
• Buyers must personally occupy the dwelling following the purchase;
• Loans may be made to refinance either existing USDA Rural Development Guaranteed housing loans or our Section 502 Direct housing loans;
• There is an up-front guarantee fee of two percent for purchase loans or one percent for refinance loans, and a 0.3 percent annual fee based on the average scheduled unpaid principal balance of the loan.
• Closed loans have secondary market acceptability, including Freddie Mac, Fannie Mae, Ginnie Mae pools, and many state housing finance agencies;
• Guaranteed loans are subject to the provisions of the Civil Rights statutes, including the Equal Credit Opportunity Act.

LENDER RESOURCES

Application Package

• Application Package Checklist - see RD AN 4575
• Package Cover Sheet
• Income Disclosure
• Existing Dwelling Certification
• Calculating Household and Repayment Income - See RD AN 4575

Closing Package

• Closing Package Checklist
• Package Cover Sheet

Additional Resources

• Program Regulations (RD Inst. 1980-D) and Administrative Notices
• Income and Property Eligibility Site
• Development Standards for Rural Housing Ohio (OH AN 1780)
• Click here for access to Guarantee Fee and Annual Fee Calculator

Updated:  2/13/2012
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Ohio webmaster